D.R. Horton 1Q17 Earnings Call Notes

David Auld

Sales people feel as good as they ever have

“Not a lot of chatter about interest rates, I can tell you the sales people in our company today feel as good about the market as they have ever. Traffic numbers are up. We’re selling houses, we’re well positioned against competition, where we have competition and it’s just a good time to be in the business.”

DR Horton FY 1Q17 Earnings Call Notes

David Auld – President and CEO

Seeing strong trends

“We were very pleased with the quarter. And we saw very strong improvement in our absorptions, community-by-community. Throughout the quarter, we continue to see a good response to our positioning. We were much better positioned coming into this first quarter this year than we had been, and we were able to execute against that. The market therefore is a very solid market. I wouldn’t say we saw significant deviations within the quarter month-to-month. It was a pretty consistent result for us. In January, the Cowboy lost. So, in this part of the world, the selling season is kind of starting now. So, we’re excited about the silver-lining on that cloud for us. But we continue to see good sales trends in January, very early into spring. And we’ll certainly keep you updated as things progress, and we get back with you in April on that one.”

2013 wasn’t too bad despite the interest rate increase

“Well, 2013, I don’t know that it was necessarily the rate increase as the rapidity of the rate increase it kind of shocked the market. And you saw, I would say, a deceleration in traffic, less consumer confidence deal from our sales agents. We fought through it. I think we ended with a pretty good 2013. But it did have a significant impact. Right now, the over-optimism that seems to be up there in the market, just traveled through Florida, and I’ll tell you, Florida feels like it is going to market as I’ve seen the long time.”

Bill Wheat

Stick and brick costs moderate, but lot costs increasing

” On a year-over-year basis, our costs, our stick and brick cost which were put, were up only 2%, which is certainly a more moderate than we saw a couple of years ago. And so we’ve been able to keep our revenue growth per square foot exceeding our cost per square foot on the stick and brick basis, which is certainly helping us going forward. We’re seeing lot cost start to increase, lot costs were up 9% on a per square foot basis this quarter. So it’s a very — we’re seeing very good results from our efforts to control our stick and brick, which is helping to keep our margins stable.”

DR Horton FY 4Q16 Earnings Call Notes

D.R. Horton (DHI) Q4 2016 Results

David V. Auld – D.R. Horton, Inc.

Michael J. Murray – D.R. Horton, Inc.

Feel good about October sales

Stephen, with regard to our October sales, we feel really good about our October sales. We were up over the prior year, in line with where we thought we’d be, and it’s definitely supporting the outlook we have for the year, in terms of underlying market factors, we’re not seeing significant changes. We continue to see both in looking at the numbers as well as talking to field, visiting the field operations, continued strong demand across the brands, and we’re not in any way alarmed. We’re in fact very encouraged and positive about the way 2017 looks and our positioning for 2017.

Bill W. Wheat – D.R. Horton, Inc.

Sales in Texas still strong

Overall, Texas has been strong for several years now, and especially, Dallas Fort Worth area certainly stands out, continues to be a very strong level. Certainly, the growth rate has moderated versus where we were, but still maintaining at a very strong level. Our sales in Houston, the second largest in Texas, was up year-over-year. So we’ve continued to see that at a very strong level, as we continue to move back down the price curve and making sure that we’re staying at an affordable level in the Houston market. Austin, San Antonio, the other two major markets also just very solid consistent results, and when you’re comparing versus where those cities and where the state of Texas was last year, that’s at a very strong level of performance.

Only modest loosening in the mortgage market

“To the extent there’s been any loosening, it’s been very modest, really similar to what we said over the last couple of years. Any loosening has been very modest. Nothing that’s moved the needle significantly in the market, but we would certainly expect that over time, probably, we continue to see a little bit more loosening, as the economy improves, as the mortgage market continues to improve.”

Miscellaneous Earnings Call Notes

Yahoo’s (YHOO) CEO Marissa Mayer on Q2 2016 Results

Marissa Mayer is proud of the last four years

“As we work to conclude the strategic alternatives process, this groundwork will serve as a solid foundation for Yahoo!’s next chapter. I am proud of what this company has achieved of these past four years. I remain committed to our team and our company and I continue to be optimistic and passionate about the future of Yahoo!”

W.W. Grainger (GWW) Q2 2016 Results

Laura D. Brown – Senior Vice President-Communications & Investor Relations

June selling volume down 3%

“There were 22 selling days in June of 2016, the same as 2015. Company sales were flat in June versus the prior year. The sales performance included 4 percentage points from acquisitions, offset by a 3 percentage point decline from volume and a 1 percentage point decline from price. In the United States, June daily sales decreased 3%, driven by a 4 percentage point decline from volume and a 1 percentage point decline from price, partially offset by 2 percentage points from intercompany sales, primarily to Zoro. June customer end market performance in the United States was as follows: retail was flat; light manufacturing, government and commercial were down in the low single-digits; heavy manufacturing was down in the mid-single digits; contractor was down in the high single-digits; reseller was down in the mid-teens, and natural resources was down in the high-teens.”

Mattel’s (MAT) CEO Chris Sinclair on Q2 2016 Results

Kevin Farr

Brexit will have minimal impact on current results

“Brexit will only have a modest impact on our full year results. Based upon current trends, we believe the negative impact from foreign exchange will be roughly $0.02 to $0.05 of EPS for the year related to Brexit.”

QUALCOMM’s (QCOM) CEO Steve Mollenkopf on Q3 2016 Results

Favorabale demand for chipsets, especially in China

“In QCT, the favorable demand trends for our new chipsets across the mid and high-end smartphone tier, especially with the top 10 vendors in China are helping to deliver improved financial performance. We are also seeing incremental demand for our lower tier chipsets in China versus our prior expectations driven in part by our differentiated all mode and modem leadership.”

5G deployment may have been pulled forward to 2018/2019

” In general, we are obviously trying to drive 5G as quickly as we can. It’s an area which we think to be a strong player in 5G, you have to be a strong player in 4G, 3G and WiFi and consequentially we think that we will maintain a very strong IP position moving forward. The standards bodies are working on that right now. So, I think we have a lot of visibility into the strength of our submissions as well as to how the industry is unfolding. I think in general, if you’d have asked me that question, a year ago, I would have said that it would have happened closer to 2020. Certainly over the last year and accelerating here over the last quarter there has been a real pull to push that in or to pull that in closer to 2018/2019 timeframe depending on what the deployment is.”

Cohen & Steers’ (CNS) CEO Bob Steers on Q2 2016 Results

Joe Harvey

Markets sending seemingly inconsistent signals

” Markets expressed seemingly inconsistent expectations as the quarter progressed. The 10-year treasury yield declined to 1.5%, suggesting slow growth, disinflation and a flight to safety amidst Brexit concerns. Yet, oil and commodity prices continued to rally. These conflicting signals are hard to reconcile, especially in light of our view that inflation should accelerate towards 4% into 2017, driven by rising energy, rent and food prices. While part of the inflation bump should be temporary, rising wages, prospects for additional central bank and fiscal stimulus and a likelihood that commodities have entered a new bull market, suggest to us that the positive market performance in real assets will continue, while the fixed income bull market has less and less room to run”

Brexit will long term be good for the UK

” I think that Brexit over the long-term will be good for the UK. It will result in some short-term pain, probably a brush with recession. But long term, I think it’s good that they can control their own destiny apart from being tied to Europe. And in terms of commercial real estate in the UK, we are expecting prices to decline anywhere from 5% to 15% or 20% depending on the property type and the biggest declines are being expected in the office market. ”

D.R. Horton (DHI) David V. Auld on Q3 2016 Results

David V. Auld – President & Chief Executive Officer

Optimistic about CA but also Texas

“Bob, the growth we’re looking at there is at a new price point that hasn’t existed out there. And we feel very optimistic based upon the land that we’ve been able to put in front of that program. So do we feel more optimistic about California than the balance of the country? Absolutely not. I think Texas continues to be strong and our Southeast area just continues to outperform”

DR Horton FY 1Q16 Earnings Call Notes

D.R. Horton (DHI) David Auld on Q1 2016 Results

Positive tone because seeing positive things in the market

“Well, we’ve a positive tone, because we’re seeing positive things happen out in the market. And with the absorptions improvement on the relatively flat community count, less pressure on margins, it was a good first quarter, and what we’re seeing going into January gives us a lot of confidence.”

We feel very good about the market right now

“The resale market is still relatively strong with continuing positive signs, so I mean, our inventory turns are improving, our absorption per flag are improving with stable and in some cases improving margins. So we feel very good about the market right now, and are not seeing other than obviously Houston slow, but the balance of our markets are doing very, very well.”

Texas is as good a market as I’ve seen

“I spent a week drive in Dallas and a week drive in Forth Worth in January. And when I got back I told Horton I had to get out of the field, because if I stayed in Dallas and Forth Worth, I would become way too aggressive buying land. It is as good a market as I’ve seen. ”

Bill W. Wheat

feeling good about what they’re seeing in January

“And Nishu just to share — just a little bit more about January, we’re seeing week-by-week accelerating sales pace as we’d expect to see in January and certainly consistent with typical seasonality and certainly in line with our expectations and our budget. So we’re feeling good about what we’re seeing so far”

Michael J. Murray

Entry level is probably the strongest right now

To the competitive landscape certainly the entry level the lower end of the market is certainly the strongest right now and any time we see that in the market we expect further competition.

Miscellaneous Earnings Call Notes 11.12.15

Chicago Bridge & Iron NV (CBI) Philip K. Asherman on Q3 2015 Results

Technology group turning around after slow start to this year

“In our Technology Group, after a slow start this year due to economic headwinds in China and a strong dollar elsewhere, the technology market is turning around.”

The Kraft Heinz (KHC) Bernardo Vieira Hees on Q3 2015 Results

ZBB is more than just a one time event

“The way we like to think ZBB, to be honest, is much less as a one-time event and much more as a systematic approach of doing business. It’s really fighting for the penny in the terms of capturing all the opportunities that allows us to be in a position that you can reinvest more behind working dollars, behind our people, behind our products, behind our brands and so on. So it’s not only a program, but it is really a business tool that we apply in different ways.”

USA Trucks’ (USAK) CEO Tom Glaser on Q3 2015 Results

Environment has been ok, holding up well

“I think it’s holding up well, to be honest with you. The volume hasn’t been exciting like it was last year but it’s consistent, it’s okay volume. As far as pricing, and probably not going to be as aggressive as some of our competitors in saying they are looking at 3% to 5%. We’re looking at probably 2% to 3%, and that’s pretty aggressive given the fact that our last two years”

AP Moeller-Maersk’s (AMKAF) CEO Nils Andersen on Q3 2015 Results

Container shipping rates have deteriorated in 2H

“Essentially, what is basically driving the change in our forecast is that the fundamentals in the container shipping have deteriorated in the second half of Q3; the rates have dropped quite significantly. So on average, the rates are or were 20% or 19.3% to be exact I believe, below last year’s and that became worse during the quarter. So September and October did not give any hopes for an immediate recovery and that’s why we adjusted downwards.’

Capacity has grown faster than demand

“So the challenge in the container business is not new. We’re struggling with all capacity; capacity has grown approximately 9% compared to Q3 last year and the market has only grown 1%. I think the low growth has taken everybody by surprise. At least it was below what we expected and definitely did not meet our hopes for the peak season.”

ArcelorMittal’s (MT) CEO Lakshmi Mittal on Q3 2015 Results

Expecting global steel consumption to decline by 1.5-2%

“This shortfall in volumes reflects the exceptionally challenging market we have faced so far in the second-half of this year. With the exception of Europe, all major markets have seen apparent demand contract in 2015. We are now forecasting global apparent steel consumption to decline by between 1.5% up to 2% this year. China, the ongoing weakness in real estate and machinery end-markets has caused a contraction of real demand by around 3% up to 4% this year.”

Chinese production is sticky but they have no structural cost advantage

“Chinese steel production is sticky, so exports have increased. Here the volumes, price, excluding China have declined to less than $300 per tonne. But this is not a profitable business model for Chinese mills as they have no structural cost advantages. This is highlighted by Sesa reports that mills lost an average of $35 per tonne in the third quarter.”

Customers are holding off on buying while prices are falling

“My view is that this is unsustainable. In order to arrest these losses, steel prices in China need to increase, either as a result of improved demand or as a result of production curtailment. The weak international price environment is eroding prices in our core domestic markets, also prompting customers to hold off on their order and their inventories down, so apparent demand has been running below real demand. And expected stabilization of prices will bring steel buyers back to the table. There is already some indication of this happening at the margin. ”

Hertz Global Holdings (HTZ) John P. Tague on Q3 2015 Results

Rise sharing impact has been less than “logical worriers” might expect

“As it relates to ride-sharing, we’ll talk a little bit about that next week. I think if you look at the highest concentration of ride-sharing markets, New York, San Francisco, and LA, in New York, you’d see an impact or at least what appears to be an impact. I think it would be hard in Los Angeles and San Francisco, given the overall industry trends, to draw a conclusion that there has been much of an impact, although obviously growth would have been higher for the industry without it. So, look, I think the impact continues to be less than the logical worriers might expect.”

The Priceline Group (PCLN) Darren Richard Huston on Q3 2015 Results

Travel is an inherently non-local business

“The case of China is a good reminder that travel is inherently a non-local business. It’s a global scale combined with win-win partnerships like we have with Ctrip, are critical for our mutual success.”

We’re doing a lot more business with Facebook. But Goog still the leader in intent based marketing

“we have been doing more and more business with Facebook. Most of it though is in the category or re-messaging or re-targeting. It’s not really in the big sweet spot which is intent-based marketing. That’s really what search gives you is intent-based marketing. Somebody types in, I want a hotel in New York, and then you are responding to that request. But the folks at Facebook very much understand this. They’re working to try to win that kind of businesses. It’s direct response business, it’s a big prize for any marketing channel, and we’re also trying to work with other large audience versus in Silicon Valley to try to get out that Holy Grail of intent-based marketing.”

Dean Foods (DF) Gregg A. Tanner on Q3 2015 Results

Milk supply is expanding faster than demand

“The EU is a leading contributor as their milk production has increased year-over-year by more than 2.5%, largely due to the elimination of the milk quotas at the end of March. This is particularly meaningful when one considers that the overall size of the European dairy production is approximately seven times larger than that of New Zealand and over one-and-a-half times larger than that of the U.S. Moreover, we see China’s milk supply expanding faster than their weaker consumption and a continuation of the Russian import ban. In the U.S., we continue to see ongoing domestic supply momentum due to a slightly larger herd and productivity growth more than offsetting the impact of the continued drought in California. These supply and demand factors should contribute to a relatively benign dairy environment over the short term.”

The health of the dairy category is as good as it’s been

“The health of the dairy category is probably as good as it’s been in my career at Dean Foods and while lower priced milk in terms of both cost and prices at retail is helping support that, I also believe that the abatement of certain secular headwinds, which we discussed in depth last quarter, is contributing. ”

D.R. Horton (DHI) David V. Auld on Q4 2015 Results

No question labor is tight

“Stephen, David. No question; labor is tight. The reports coming out of other builders – I mean, we’re not immune to it. I think we have mitigated it by having the best operating team in the industry. And the relationships that our people have with vendors, suppliers put us at the front of the line. So it flows back to the time with a company, time in a market.”

Controlling costs is really about people

“You guys are going to get tired of me saying this, but it really is the people. We got the – one of the toughest markets, toughest weather conditions, toughest labor markets, is our Dallas-Fort Worth area. And those two guys, because they have been in the market for 20-plus years, because they have a direct relationship with the vendors and suppliers, make a call and get people to show up. And you just can’t put a – you can’t quantify that and put it into a model.”

We still think there’s legs left in this cycle

“I would say we still think that there’s legs left in this cycle. I mean, we’re not even close to what is a historical demand. So we’re trying to be very judicious and value the capital we have.”

The WhiteWave Foods (WWAV) Gregg L. Engles on Q3 2015 Results

Almond milk sales growth has slowed but is still strong

“These are category growths that are very strong, they’re certainly not what we saw last year where we saw growth, where we still had the expansion of Almond, but it has been mid single-digits over the past several quarters, and we now have a category here that’s approaching $1.4 billion in overall retail sales.”

New distribution channel creates new manufacturing challenges

“I will add to that Ken, that this move into the immediately consumable beverage in the away-from-home market requires some slightly different manufacturing capabilities than we have. So we’re going to have build those – up those products, really want to be aseptic, so they can be distributed in a non-refrigerated way. You can make it work – refrigerated, but it’s somewhat more challenging.”

Energizer Holdings (ENR) Alan R. Hoskins on Q4 2015 Results

Seeing signs of stabilization in the battery category

“First, we continue to see signs of stabilization within the battery category. Value and volumes were essentially flat over the latest 12 weeks and 52 weeks. This is an improvement over the trends we’ve seen in prior years”

TV is still the best ROI for us on advertising dollars

“We were able to understand the return we get on each of those particular mediums. I can tell you that today, given both the effectiveness of our copy, the strength of our brand and the fact that we have global icons, TV is still the best ROI for us. But you will see us over time continue to migrate to shifts in mix of how we approach consumers and shoppers depending on what it is we’re launching, the marketing news that we’re bringing to the market and, again, continued ROI rates on each of those individual investments depending on what’s in the mix. ”

DR Horton 2Q15 Earnings Call Notes

Spring selling season is in full swing

“The spring selling season is in full swing at D.R. Horton. During the second quarter housing market conditions were healthy and relatively stable with new home demand growing moderately across all our markets.”

It’s a great market for us because we can just ride it

“That’s pretty much the market out there right now. It’s a great market for us because we’ve got the land, we’ve got the operating platform, we’ve got the people in place. So we’re not having to make any investments. We’re just riding the market. It jumps up then labor becomes a bigger issue and some of the higher price land that have been bought by others becomes competitive and we like the way deals run, it’s a good market for us, or consistent, absorptions are consistent, margins are consistent, yes, just continuing to gain market share.”

Stick and brick costs rising in line with price now

“our stick and brick cost per square foot this quarter was up about 4.5% on a year-over-year basis and that still wasn’t in line with our revenues but it’s a smaller increase than we’ve been seeing and headed in the right direction. Sequentially we actually saw our stick and brick cost increase per square foot almost essentially in line with what our price per square foot did. So we’ve made a lot of progress on that front and we plan to continue to do so as we move throughout the year.”

You would think that Texas is slowing but it’s not

” have spent the last month and a half driving our Texas markets, including Houston with the Regional President reporting and his Divisional Presidents. You would think the market would be slowing down but we are seeing consistent performance pretty much across the Board and our April sales are a continuation of what we saw in the first quarter.”

DR Horton 4Q14 Earnings Call Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. Full transcripts can be found at Seeking Alpha

Big increase in volume

“In the first quarter, our homes sold and closed increased by 35% and 29% respectively, and we had another solid quarter of profitability with $220.7 million of pretax income on $2.3 billion of revenue.”

Texas operations holding up fine

“We saw our Texas operations perform in line with the company and our expectations for the first quarter and into the first few weeks of January so far. So, while we would expect that there could be some general slowdown in Texas at some point, specifically perhaps Houston and Midland, we haven’t exactly seen it yet, and we’re very encouraged seeing the results inline with the expectations right now.”

Spring selling season not here yet, but it’s approaching

“Spring is not even really here yet. But we’re in line with our expectations and we would expect that we’re going to get every margin of dollar that every dollar of margin we can as we move to the spring and as our pace and absorptions stay on track.”

We do expect our land costs to increase

“No, doubt, our land costs are a components that we do expect to increase. We have seen our land as a percentage of our overall revenues or on a per square foot basis, similar to how it look at stick and brick.”

When we underwrite a purchase, we assume everything stays the same

“As we look forward will underwrite a land purchase, we assume flat pricing on the homes as well as flat pricing on the cost develop if it’s a land parcel to be developed as well and stick and brick. It just too hard to start predicting, this is going to go up by this percent, these costs to go up by that percent. It’s much for us controllable underwriting process to look at pricing on a flat basis and then understand what that performance we expected to be to make the investment decision.”

Weather has been a little better this year

“I think weather patterns have been better this year and last year, I mean, we didn’t gave a weather report last year, but I do think that weather impacted people’s ability to get out and buy else. I think the FHA conversation has got people thinking about buying a house and going into models.”

D R Horton FY 4Q14 Earnings Call Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. Full transcripts can be found at Seeking Alpha

CEO retired

“I’d like to take a minute to recognize Don Tomnitz on his recent retirement and thank him for his leadership, advice and support over the years. On behalf of the entire D.R. Horton team I’d like to congratulate him on an outstanding carrier of 31 years with the company, 15 years as our CEO.’

New CEO is not a spotlight kind of guy (the conference call shows it too, a very team oriented approach)

“I guess the initial focus is really getting our handle on this public position role Stephen I have always been behind the curtain kind of guy and being pushed out front is different for me.”

Focus is just to keep us doing what we’re doing

“Three to five years down the road I think my goal is just to continue the excellence companies had, focus is on consistency really on a day-by-day, subdivision by subdivision execution. I feel like our position in the industry today is so unique, the fact that we have been the largest for as long as we’ve been the largest, the geographic footprint that we have it really is, if we just execute and do what we can do on a day-to-day basis we should have a great three to five year run.”

Texas is still strong, lower oil prices could help us in other parts of the country

“Texas remains strong for us. I think if oil prices stay down it could soften somewhat but any softening we see in Texas, I think low oil prices should create additional demand in the other markets. So we’re Texas based but we’re significant in really every market in the country that we want to be in. So it’s pretty good balanced for us. Could actually be beneficial.”

land costs pretty flat, other costs up 5%

“Our land cost has remained relatively flat as a component of the overall cost going into our house. We called out some of the other things that did impact our margin this quarter but land remained relatively flat…And in terms of the other input cost on a year-over-year basis we have seen some cost pressures, our stick and brick cost on a per square foot basis were up about 5%. On a year-over-year basis, sequentially they are up about 2%.”

We’re happy with how things have gone so far in October

“our October sale phase was strong and we feel good with what we’ve seen thus far even though we’re only 11 days into November and greater than 20% in October. As David said earlier we’re on plan to deliver what is in our business plan and you’ll have to wait till January to see what we deliver for the quarter.”

Still a very good sales month for us

“I wouldn’t read anything special into whether we accelerated or decelerated in October. I think in general we would still say it’s a very good sales environment, still a very good sales month for us.”

Our assumption is that there aren’t big changes from new FHA guidelines

“In terms of the FHA, FHA clearly there is a lot of talk going on in terms of our assumption as we look at our business. We are not assuming any change in the mortgage environment, just the same current mortgage lending standards. “

DR Horton 2Q14 Earnings Call Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. Full transcripts can be found at Seeking Alpha

Largest homebuilder

“D.R Horton has been the leader in the U.S homebuilding industry for 12 consecutive years. Our market share position today is the largest in our history, with 40% more homes closed than any other builder in the most recently reported 12-month period.”

Expect strong Fiscal 4Q

“With our 11,365 homes in backlog and the year-over-year improvement, we have seen in our sales during the first part of July, we expect strong home closings, revenues and profits in our fourth fiscal quarter ending September.”

Sold 8551k homes

“The value of our net sales orders in the third quarter increased 32% from the year-ago quarter to $2.4 billion. Homes sold increased 25% to 8,551 homes on 11% increase in active selling communities. Our average sales price increased 5% to $281,300, the cancellation for the third – cancellation rate for the third quarter was 24%”

Overall demand is stable

“we saw a significant increase in demand in 2013. And we saw a significant price appreciation in 2013. And so the levels of demand a year ago had increased dramatically. We all know that has moderated some since then and as we assess this spring, we would say on an overall basis the demand is relatively stable with where it was last year.”

Normal margins are around 20%

“the normal gross margins on this industry, a range between 18% to 22%, we believe a normalized gross margin for ourselves, or somewhere right at the 20% level”

8 or 9 year supply of land

” we have a total of 178,000 – 175,000 total lots and that’s about a 4 point – eight or nine year supply based upon on our trailing 12 month sales. So, we feel like that, we are in a very, very strong position that we are not out there in marketplace today, paying higher price for land, that we’ve got a great land inventory as we said quarter-after-quarter, with that very, very low cost basis in it.’

Costs are definitely increasing and prices are moderating

“we believe that pricing has moderated over the last probably nine months to 12 months. Costs are definitely increasing as our subcontractors and our vendors continue to try to raise their prices given where they had to take their prices so low during the downturn. So, we’re finding increasing prices with moderating increases in sales prices and we believe that the norm as Bill said earlier, we are going to gravitate back to a more normal level [of gross margin]”

Not at the peak of the cycle

“we don’t believe we are at a peak of cycle at all.”

Labor costs are driving cost increases

“I’d say on the labor side and our land still continues to be a benefit because we were early movers and in terms of our stick and brick costs we are seeing some pressure on the material side. But more so on the labor side its specifically in those local markets where we’ve seen pretty good growth in volumes.”