AV Homes' (AVHI) CEO Roger Cregg on Q2 2016 Results - Earnings Call Transcript

| About: AV Homes, (AVHI)

AV Homes, Inc. (NASDAQ:AVHI)

Q2 2016 Results Earnings Conference Call

July 29, 2016, 08:30 AM ET

Executives

Roger Cregg - President and Chief Executive Officer

Mike Burnett - Executive Vice President and Chief Financial Officer

Analysts

Michael Plancey - NN Investment Partners

Alex Barron - Housing Research

Adam Starr - Gulfside Asset Management

Operator

Good day, ladies and gentlemen and welcome to the AV Homes Second Quarter Conference Call. At this time all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded.

I would now like to introduce your host for today’s conference, Mr. Mike Burnett, Chief Financial Officer. Mr. Burnett, you may begin.

Mike Burnett

Thank you, Danielle. Good morning and welcome to the AV Homes second quarter 2016 earnings call. With me on the call today is Roger Cregg, President and Chief Executive Officer of AV Homes.

This morning, we will discuss the operational and financial results for the second quarter ended June 30, 2016. In addition to the earnings release and data sheets that we filed yesterday, we have posted supplemental slides to the Investor Relations section of our website at avhomesinc.com, highlighting our operating trends and to assist you in the analysis of our results.

This presentation includes certain non-GAAP financial measures. Reconciliations of those non-GAAP measures to the most directly comparable measures under GAAP can be found in the supplemental slides posted on our website.

Before we begin, let me remind you that this conference call and the webcast contain forward-looking statements within the meaning of the U.S. Federal Securities laws, which may include information regarding the plans, intentions, expectations, future financial performance or future operating performance of AV Homes. Forward-looking statements are based on the expectations, estimates or projections of management as of the date of this conference call.

Although management believes these expectations, estimates or projections to be reasonable as of the date of this call, forward-looking statements are inherently subject to significant business risks, economic and competitive uncertainties or other contingencies, which could cause our actual results or performance to differ materially from what may be expressed or implied in the forward-looking statements.

Important factors that could cause our actual results or performance to differ materially from our forward-looking statements, include those set forth in the Risk Factors section of our most current Annual Report on Form 10-K and in our other filings with the Securities and Exchange Commission, which are available online at sec.gov. AV Homes disclaims any intention or obligation to update or revise any forward-looking statements to reflect subsequent events, and circumstances, except to the extent required by applicable law.

With that, I will now turn the call over to Roger Cregg for a discussion of the business results. Roger?

Roger Cregg

Thank you, Mike. Good morning, everyone. Welcome and thank you for joining our call this morning to review our results of the second quarter of 2016. I am pleased to tell you that AV Homes has had another very good quarter. We continue our efforts to profitably grow the company striving to create and unlock value to increase shareholder's returns which is again reflected in our second quarter's results.

For those of you following the company over the last three years, you know our strategy to transform the business has been to drive profitable growth through our refocus and alignment around the diverse consumer and geographical segmentation platform.

Our efforts to successfully execute on this strategy have been playing out quarter after quarter during this time, which has included securing the necessary capital to supplement our growth through both organic investment and acquisitions, repositioning assets, recruiting talented management, developing processes and systems and coordinating alignment for best practices to leverage our overhead structure as we grow.

In addition, we are building a solid and well-balanced capital structure to meet the demands of a dynamic marketplace. These efforts, activities and results have continued to enhance our credibility and integrity with the consumer marketplace and the investment community.

Our hallmark of these results is due to the passionate and dedicated employees of AV homes to include those new and tenured in the organization who strive every day to build a culture of success by delivering quality homes and outstanding service.

Once again this quarter we achieved year-over-year growth in homes delivered and net new orders, homebuilding revenues, overhead leveraging and growing backlog. The second quarter was highlighted with an increase of 104% in homes delivered, 55% increase in net new orders on an increase of 40% in units and 143% growth in homebuilding revenue from home closings. Our selling communities for the quarter increased to 62 from 38 and our closing communities to 59 from 32 compared to the same period last year.

During the second quarter we achieved growth in net new orders in all segments and our backlog increased over 1100 units at the end of the quarter. Gross margins for the second quarter reflect an increase of 130 basis points compared to the same period last year and on an adjusted basis to exclude the capitalized interest and the impact to purchase accounting yielded an increase of 230 basis points compared to the prior year quarter on the core homebuilding revenues.

We continue to look for opportunities to selectively increase product prices, to lower incentives, pricing on options and lot premiums where appropriate to increase our margins or offset cost increases.

In the overhead expense area we continue to gain further leverage from the size and scale of the operations with our division homebuilding SG&A improving to 11.7% of homebuilding revenues from homes closed in the quarter down from 15.3% in the prior year quarter or an improvement of 360 basis points.

Additionally, our corporate overheads improved to 2.3% of home building revenues from homes closed in the quarter down from 5.6% in the prior year quarter or improving 340 basis points. In addition, we ended the second quarter on a strong financial position with adequate liquidity to take advantage of further growth opportunities as they arise in the marketplace.

Mike will address in detail the significant changes in the deferred tax asset valuation allowance, the amended and extended revolving credit facility and our increased performance outlook for 2016.

In summary, we remain confident that our business is well-positioned to opportunistically benefit and capitalize on the current market environment. We look forward to continuing to improve our profitability by leveraging our diversification platform, increase community count and operational execution. We remain focused and confident in our long-term strategy to deliver greater value to our shareholders.

At this time, I'd like to turn the call back over to Mike who will discuss our financial results for the second quarter in more detail. Mike?

Mike Burnett

Thanks Roger. We continue to execute well against the strong business plan of increasing profitable growth. Total revenue increased to $188 million driven by homebuilding revenue which increased 143% compared to the same period in 2015.

Pre-tax income in the second quarter improved to $7.3 million from a loss of $4.5 million in the second quarter of 2015 while net income increased to $117.4 million for the current period due to $110.1 million income tax benefit as a result of the reversal of the valuation allowance on our deferred tax assets, which I will discuss in more depth shortly.

Diluted earnings per share rose to $4.25 per share including a $4.13 impact from the valuation allowance reversal compared to a loss of $0.20 in the prior year period. And adjusted EBITDA also increased to $15.3 million in the current quarter from $1.6 million in Q2 2015.

Focusing on the homebuilding operating results, in the second quarter of 2015 we closed 594 homes generating $184.6 million revenue. This represents 104% increase in unit volume and 143% increase in revenues over the same period a year ago. The unit growth was strong in each geographic segment of the business.

Florida was up 44% to 313 units. Arizona more than doubled increasing 117% to 130 units and the Carolinas closed 151 units versus just 13 a year ago, primarily as a result of the acquisition of Bonterra Builders in July of last year as well as the organic growth within communities opened in the last year.

Average price per unit for homes closed in the current quarter increased by 19% to approximately $311,000 compared to the prior year quarter due to both the additional closings from Bonterra and other newly opened communities with higher average selling prices in our existing communities as well as targeted price increases in the existing communities in each of our three geographic segments.

Turning to a discussion of the second quarter gross margins, we continue to significantly improve our homebuilding gross margins in each of our geographic segments. Florida's gross margin increased 300 basis points to 21.8%. The Carolinas gross margins increased 480 basis points to 13% and Arizona's gross margins increased 550 basis points to 16.5%, all compared with the second quarter of 2015.

The primary drivers of the improvement are cost reductions as a result of our growing scale, targeted price increases in communities in which we are gaining momentum after the initial year of opening as well as the mix of lots and floor plans within each community. Though our gross margin expansion in each of the segments increased anywhere from 300 to 550 basis points, our consolidated gross margin for the quarter increased 130 basis points to 18% compared to the prior year.

With a greater proportion of our current growth coming from our Arizona and Carolina divisions the favorable overall impact of the higher gross margins in the Florida segment are reduced. However, we can now demonstrate greater geographic diversification in our business with 49% of our revenue coming from Florida, 29% from the Carolinas and 22% from Arizona.

In the second quarter of last year 76% of our revenue was from Florida. As such we continue to become more efficient and profitable in each of our divisions while reducing the overall risk profile through expanded geographic diversification. Also of note in the quarter the gross margins for the Carolinas include the negative effect of approximately 160 basis points due to the Bonterra Builders purchase accounting impact of the WIP write up in the current period.

On a consolidated basis this is a 50 basis point net impact and as we disclose each quarter our gross margins also include the impact dispensing previously capitalized interest which amounted to 2.9% in the second quarter.

Moving on to selling, general and administrative costs, including both homebuilding SG&A and corporate G&A our SG&A margins improved 700 basis points to 14% in the second quarter of 2016 compared to 21% in the second quarter of 2015. Homebuilding SG&A, without the corporate G&A costs improved 360 basis points to 11.7% from 15.3%. Significant improvements in the overhead leverage due to continued revenue growth and cost containment were partially offset by higher co-broker percentages in the Florida market.

Our corporate G&A expenses improved to $4.2 million or 2.3% of homebuilding revenue compared to $4.3 million or 5.6% in the second quarter of 2015. This continues to demonstrate our ability to effectively control costs and leverage our existing cost structure while substantially growing revenues.

Interest expense decreased $1.5 million to $880,000 in the second quarter compared to Q2 2015 due to more interest being capitalized on our increased amount of land under development and homes under construction in each of our divisions.

Now on to taxes. We've discussed on previous calls that we have a full valuation allowance on our deferred tax assets of over $120 million and that we evaluate the need to continue to have that allowance quarterly. I am pleased to say this quarter we concluded that the valuation allowance was no longer required. This conclusion was based on the achievement of sustained growth of our three-year cumulative profit which now stands at over $20 million.

The fact that we have generated pre-tax income in six of the last eight quarters including the last four consecutive quarters, the fact that we have generated pre-tax income in each of the first two quarters of 2016 and have a strong backlog, our increasing profit expectations for the year, continued improvements in 2016 of key operating metrics including revenue growth, gross margins and SG&A leverage along with the underpinnings of the continuation of favorable economic and homebuilding industry conditions.

In order to determine how much of the valuation allowance to reverse, we evaluated each individual component of our deferred tax assets, federal NOLs, state NOLs, other timing differences, to ensure that they would reasonably be expected to materialize and would be used prior to any applicable expiration dates. In doing so, we determined that all of the deferred tax asset met the criteria.

Accordingly, the entire valuation allowance has been reversed with one timing exception which requires that when you reverse the valuation allowance in an interim period you need to allocate a portion of that reversal for the remaining quarters of the year based on your income expectations. Accordingly, we reversed $113 million of the $124 million valuation allowance in the second quarter leaving $11 million to reverse in the third and fourth quarters of this year.

The balance sheet now reflects $110.2 million net deferred tax asset and our stockholders equity increased to a total of $422 million. The income statement shows $7.3 million of pre-tax income and a $110 million tax benefit giving us a net income of $117.4 million or $4.45 per diluted share for the quarter, $4.13 of which was associated with the reversal.

Moving on to a discussion of net new orders, the number sales contracts signed net of cancellations during the second quarter increased 40% to 685 units compared to the prior year. Florida's net new orders increased 10% to 359 while Arizona increased 1.5% to 133 units and the Carolinas added 193 units versus 34 a year ago. The increase was primarily driven by the expansion in the number of selling communities to 62 from 38 a year ago with most of the increase from the Carolinas which has 26 selling communities up from six last year.

On a dollar value basis, net new orders increased 55% to $213 million. This strong sales performance has increased our backlog to 1144 units from 803 units at the end of the prior year period with the dollar value of $363 million, 60% higher than the end of the second quarter of 2015.

On an average price per unit basis, our home prices continue to trend favorably due to selective price increases and improvements in the mix through the addition of higher-priced homes and communities. This translated into an average price per unit in the backlog of approximately $318,000.

Moving on to the balance sheet, cash and cash equivalents, including restricted cash increased to $24.2 million from $16.9 million at March 31, and our long-term debt was consistent at $310 million including $35 million drawn on our credit facility. From a credit statistics perspective, our net debt to net book capitalization decreased to 40.4% and our asset coverage held steady at 2.1 times.

Also we were pleased to announce yesterday the expansion and extension of our credit facility. We increased the facility size from $105 million to $165 million through June of 2017 and then $150 million from that point through the maturity of July 28, 2019. Additionally, we increased the accordion feature to allow further expansion of up to $200 million in total capacity. Pricing terms and conditions largely remain the same as the old facility.

Given the results of the first half of the year, we are upwardly revising elements of our original 2016 full year outlook. Of greater significance, we are increasing the expectation for the number of new homes closed by 125 to 150 to a range of 2300 to 2400 units representing a year-over-year increase of 31% to 37%.

With the additional closings and a reduction in the expected amount of interest expense of $5 million, we are now expecting our pre-tax income to be in a range of $28 million to $30 million, an increase of 10% over our prior guidance and at the midpoint of the range more than 140% increase over last year.

In summary, we're pleased with the results for the first half of the year which reflect strong top line growth and continued improvements in each of our profit metrics. We have a robust backlog that supports the second half of the year and we are confident in our ability to achieve our full year goals.

With that, I'd like to turn the call back over to the operator to open the lines for questions.

Question-and-Answer Session

Operator

[Operator Instructions] And our first question comes from Michael Plancey from NN Investment Partners. Your line is open.

Michael Plancey

Good morning.

Roger Cregg

Good morning.

Mike Burnett

Good morning.

Michael Plancey

Just a couple of questions first on SG&A guidance it seems like you took that percentage up a little bit. You know you have more closings just on, but what's going on there?

Mike Burnett

I mean I think the biggest driver, this is Mike, of that is, as we took a look at the year, the co-broke percentage in some of our markets has increased a little bit. And so a piece of that overall SG&A is commissions and co-broke. That is a variable cost within the business not a fixed component. So even though we are seeing better than expected top line performance, there is a piece of variable cost associated with that the commission and co-broker fees that we're not able to leverage within that cost structure. So that's probably the biggest piece of those components.

Michael Plancey

Okay, great. And then when you look at the pace of the orders it looks like it slowed a little bit year-over-year, is that just a function of the mix that you have now or…?

Roger Cregg

Yes, Mike, this is Roger. Yes, this is definitely seasonality and then certainly the number of communities is going to play off of that a little bit. We opened several new active adult communities last year. There were some pent up demand in those as well. So we saw a little bit different pattern coming into the new year of 2016 relative to last year. So I would say more of it is seasonal and also the addition year-over-year of the acquisition and just a pattern from that as well.

Michael Plancey

Okay, and then any thoughts on land spend for this year?

Mike Burnett

Yes, land spend is going to be pretty consistent kind of in the $125 million range, land and land development for the year which is complacent with our business plan had been.

Michael Plancey

Okay, great. Thank you.

Operator

Thank you. [Operator Instructions] And our next question comes from Alex Barron from Housing Research. Your line is open.

Alex Barron

Hey, good morning guys. Great job.

Mike Burnett

Good morning, Alex.

Alex Barron

Hey, I was wondering if you guys can elaborate I guess your thoughts and comments on the active adult segment and kind of what you're seeing going forward, what percentage of your sales I guess are you guys getting from that now and are you seeing any acceleration from that versus last year?

Roger Cregg

Yes, this is Roger. I would say we've not seen a significant increase. I think pretty well documented in the industry overall that still that - the active adult is relatively slow. For us, we've not really been trying to push volume over price. But I would say generally it is relatively flat.

We've seen a little bit in the Arizona market where last year we opened a new community here, so we had some pent up demand. So we backed off a little bit on that quarter to quarter when you look over last year. But generally I'd say it is slow. Again it is a very discretionary buyer and so they typically don’t have to move and I think we're in a different environment today where things are a little bit slow on the active adult side.

We have a status strategy where we were looking for, you know our one time strategy was 100% active adults, we wanted to be 60-40, 40% active adults, 60% primary. I'll tell you we're probably running in the 70-30 at the moment and overall again that's what we're seeing for the current period. Again, we're not trying to push volume in that area. And again, we'll continue to look at that and watch what is going on. We've got a little bit more competitive and this we have seen in Florida where some of our competitors offering more discounts to get more volume, again we have not played in that, but we are watching that closely.

Alex Barron

Okay great, and then as I was looking at your regional margins it seems like the gross margins expanded in Florida and Arizona, but in the Carolinas I guess it has kind of been trending a little bit lower over the last few quarters, anything going on there or do you expect it to bounce back?

Roger Cregg

Yes, it is mostly mixed. It had some large project - they have got larger product there, they have got some homes in the $800,000 to $1 million range as well relative to some of the other segments in Arizona and Florida. And so, it just moves around, but there is nothing systemic there. It is just really the mix driving through more than anything else. Again and Florida has benefited a lot from the legacy assets there in the active adult, but again doing very well in the primary as well.

So I would just say nothing systemic at all. Pricing seems to be good. Costs are under control. We continue to monitor and manage on a daily basis our pricing structure as I had mentioned through our options, through our discounting or incentives and playing that off of either trying to get more margin on the bottom line. We are offsetting some of the cost increases.

Alex Barron

And then one last question, any guidance Mike on tax rate going forward now that you have reversed the DTA and also any kind of estimate of how the remainder of the DTA is going to, when you will be able to reverse that?

Mike Burnett

Yes, the residual valuation allowance that we have on there should be eliminated by the end of the year. The net result will look somewhere around what we would look like earlier in the year which is effectively leave the impact of the provision. So you end up with about a zero percent provision in the third and the fourth quarters. And then as we move into 2017 and going forward it kind of goes back to what of a more normalized they would be. So the expectation of say 39% income tax rate 2017 going forward.

That will come through on the P&L, but I would clarify that because we are using that deferred tax asset and those NOLs, we still won't be a cash tax payer for quite some time. So even though the income statement will reflect that charge going forward, it will be not - it won't be a cash charge for us.

Alex Barron

Okay. It sounds good and well keep up the good work. Thanks.

Mike Burnett

Thanks Alex.

Operator

Thank you. And our next question comes from Adam Starr from Gulfside Asset Management. Your line is open.

Adam Starr

All right, yes congratulations on finally getting that asset on the books. Sorry, I missed what the going forward tax rate will be on a GAAP basis, will it be disposal of those rates?

Mike Burnett

Sure. For the balance of this year it will still look like zero until we get rid of that remaining valuation allowance that is still on there and then going forward, we would expect that to be around 39%.

Adam Starr

Okay and is the 39% which should be the same?

Mike Burnett

Correct.

Adam Starr

Yes, there is a slight drop in the number of communities that you forecast, is that for the couple were build out or is it just taking longer to get approval, if you could just comment on that?

Roger Cregg

Yes Adam, this is Roger. All of the above. I mean we have actually had one or two communities roll off, but we have had some delays in some projects, a couple of them actually in North Carolina. Some of them suffered from really the weather that we had in the beginning of the year and the slowdown there from the development side. We used third parties for that and once you are behind there is very little opportunity to catch your way up there.

And then we have seen some where we have gotten delays in municipalities for approvals or changes in some of the impact fees that they are also charging on those that have caused us to relook at what we are doing in some of those communities. But overall we still feel pretty good about the trend we're on which is behind a little bit on a couple of the openings.

Adam Starr

And what do you think your position is for next year being in terms of the number of communities you will have active and do you have the land to maintain the current rate of production?

Roger Cregg

Yes, I think we are in pretty good shape for 2017. We have got more communities on the board. We have acquired several through the last couple of quarters. We have been managing as I mentioned on the last couple of quarters from a standpoint of being fully invested trying to maintain a balance sheet leverage structure of roughly around 50%. So that was also somewhat an inhibitor to run out and get a lot of land and we're balancing putting money in the land versus the growth in the in the WIP side.

So, all of those different levers we've been managing, I think as we move forward here we’re being more aggressive on the land acquisition side, and I think we're in pretty good shape as we move into 2017. So we've been active in the market and feel pretty good about what we've been doing so far.

Adam Starr

So, you can support the volume growth with your inventory levels?

Roger Cregg

Yes.

Adam Starr

Okay and just a quick comment on what is the status of the Parkway?

A - Roger Cregg

Yes, so the Parkway is opened down through, coming down through Orlando into the Poinciana area and just for clarification this Parkway is the two lane highway, basically with very, almost no stop lights on it. So it’s also a toll road, which charge about a $1.75 each way. So it has improved on the traffic flow, but overall we've not seen any huge meaningful shift in volume coming down or increased activity I would say on the sales side.

But it's early yet. More and more people are using that to get off the spine roads, but on the other hand too that causes congestion on a two lane highway where passing is limited. But overall again we're seeing it as a positive as we move forward.

Adam Starr

You think it will give a lift to some of your excess land for commercial use or anything?

Roger Cregg

Yes, we're hopeful. We were just down there a couple weeks ago working on strategy for what we're doing there. And we're cautiously optimistic that some of the commercial property and a lot of what we have is small out lot with three and four acres that could be for small commercial. But we're thinking that's pretty good. So we're watching pricing in that area as well as the opportunity to monetize additional land we have right around the Solivita area for the active adult.

So, we've got a couple other parcels there that we're looking at to open more communities on the primary side. Again, all good stuff, no immediate impact, but things we're thinking about and planning on as we move forward.

Adam Starr

All right, thanks a lot.

Roger Cregg

All right, thank you, Adam.

Operator

Thank you. [Operator Instructions] And our next question comes from Mike Plancey from NN Investment Partners. Your line is open.

Michael Plancey

Yes, I have just one followup, with your improved balance sheet and operations, any intension go back to the rating agencies and update them?

Mike Burnett

We regularly go to them and give them annual updates and have a good dialogue with them, each. Moody's and S&P went through their annual review recently with us and had some favorable movement there. So, yes we maintain a good healthy dialogue with them and they're aware of what our business plans are, and they're watching our results quarter-by-quarter.

Michael Plancey

Okay. Thanks.

Mike Burnett

Thank you.

Roger Cregg

Thanks Mike.

Operator

Thank you. And our next question comes from Art Wilkinson from [indiscernible]. Your line is open.

Unidentified Analyst

Thank you, great quarter. If you just speak, excluding the adult communities what’s your assessment of the price cross relationship of the land in inventory in the land you’re buying in relation to the projected selling price, is it the same as historically better or worse forgetting adult community?

Roger Cregg

Art, this is Roger. So we have underwriting criteria that we lay out. So it's pretty simple in the industry, you've heard people talk about looking for gross margins right around the 20% range, overheads around 10%, pre-tax around 10%. So that backs you into an equation of what you can you know pay for your land, roughly land should be 20% to 25% of your average selling price.

So those are the guidelines we try to look at. You find them in the range where you might be at an 18% gross margin or 22%, but I would say also margins aren't always the driver, returns are. So if you can find a project to give you and we targeted 20% IRR cash on cash on levered. If we find something at 18% or 22% that may be in the wheelhouse to look at because you still have opportunity for price appreciation.

So overall we're not doing stuff that is much lower than our target and again sometimes you get back into having to do something because you've got to continue to keep your overheads leveraged. But in general, we’re still in the same range we have been. So we won’t do everything that we see. We try to solve for that equation all the time and that’s pretty standard in the industry quite frankly is not to get too far out there and not to anticipate you will get 10% price appreciation every single year for the next four years, to make that project work.

So, that’s in general. So we’re still within that bandwidth. That we’ve like to put the discipline out there, not take a lot of risk because as you know there is cycles in the industry and probably with all likelihood will meet one sooner than later. And the last thing we want to do is be in a situation where we overpaid, have to take impairments and run a business from that perspective. So, lot of discipline on it and still staying within that 20% range.

Unidentified Analyst

Good, one other question, that’s a good answer. In terms of the Charlotte, North Carolina acquisition I have two part question, the first is it seems, I would characterize it as a homerun and I was wondering if you would do the same? And then the second part is, is the market in your trading territories in Charlotte, North Carolina is it cooling off a little bit? It looks like may be from your incoming rate is not quite as robust as it was in the last six to nine months.

Roger Cregg

Yes, I’m very pleased with the operations there. I think it was a very, very good acquisition. It’s got a great management team. We consolidated the Bonterra with the AV in that market. They are running growth as well year-over-year just in the business alone even without us. They had that project going. And I would say the ebb and flows as well in that market. I think it’s very good market, it is still one of the top ten markets in the country still offers a great opportunity. So, I'd say again, we’re seeing seasonal patterns, weather patterns, that type of thing and not to rely on that as excuses, but it's been a choppy market around in a lot of our markets.

There is really no discernable pattern I would say that’s been consistent, kind of and if you look back years we could always be able to say patterns were pretty close to the same. We’ve opened a number of new communities. We’ve got some of the AV Homes communities we have opened and started up. So we are seeing some volatility in that, but I would say nothing concerning at all. I think we’re well on track to hit our plans and feel pretty good about where we are. So I would say we’re kind of right on top of where we thought we would so far through this year.

Unidentified Analyst

Terrific, thank you very much.

Roger Cregg

Thanks Art.

Operator

Thank you. [Operator Instructions] This concludes today’s Q&A session. I would now like to turn the call back over Roger Cregg, President and CEO for closing remarks.

Roger Cregg

Thank you, Danielle. Once again, I would like to thank you for joining us on this morning’s call. We appreciate your time and interest in AV Homes. We look forward to updating you on our progress on the third quarter conference call. Have a great day everyone and a great weekend. Thank you.

Operator

Ladies and gentlemen, thank you for participating in today’s conference. This does conclude the program and you may all disconnect. Everyone have a great day.

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