Taylor Morrison Home (TMHC) Q4 2019 Earnings Call Transcript

Taylor Morrison Home (TMHC -0.12%)
Q4 2019 Earnings Call
Feb 05, 2020, 8:30 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good morning, and welcome to Taylor Morrison's fourth-quarter 2019 earnings conference call. [Operator instructions] As a reminder, this conference call is being recorded. I would now like to introduce Mr. Jason Lenderman, vice president, investor relations, and treasury.

Jason Lenderman -- Vice President, Investor Relations, and Treasury

Thank you, and welcome, everyone, to Taylor Morrison's fourth-quarter 2019 earnings conference call. With me today are Sheryl Palmer, chairman and chief executive officer. And Dave Cone, executive vice president and chief financial officer. Sheryl will begin the call with an overview of our business performance and our strategic priorities.

Dave will take you through a financial review of our results along with our guidance. Then, Sheryl will conclude with the outlook for the business, after which, we'll be happy to take your questions. Before I turn the call over to Sheryl, let me remind you that today's call, including the question-and-answer session, includes forward-looking statements that are subject to the safe harbor statement for forward-looking information that you will find in today's news release. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations and projections.

These risks and uncertainties include, but are not limited to, those factors identified in the release and in our filings with the Securities and Exchange Commission, and we do not undertake any obligation to update our forward-looking statements. Now, let me turn the call over to Sheryl Palmer.

Sheryl Palmer -- Chairman and Chief Executive Officer

Thank you, Jason, and good morning everyone. We appreciate you joining us today as we share our year-end results for 2019 and look ahead to what will be a transformational year for the company as we soon close on our acquisition of William Lyon Homes. Before I get into too many details, I'd like to take a step back to reflect on what the last decade meant to Taylor Morrison. In 2010, we totaled 2,300 sales orders across eight U.S.

markets. In 2011, we were acquired by private equity firms, TPG and Oaktree. In 2012, with plans to deepen our presence in Texas, we completed our first acquisition with Darling Homes. In early 2013, we became a public company through the largest IPO of a homebuilder in New York Stock Exchange history.

We sold our Canadian operations in 2015 and continued our acquisition activity with two more that year, JEH and Orleans Homes. We furthered our southeast expansion in 2016 when we acquired Acadia homes in Atlanta and then, our private equity partner successfully exited their investment in our company in January of 2018, the same year we closed on our fifth acquisition of the decade and our first public company deal with AV Homes. This intentional focus on and dedication to smart growth and operational excellence put us in a position to make 2019 our biggest year yet. We ended the year with 10,517 sales orders across 21 markets throughout the U.S., representing an 18% compounded annual growth rate over that 10-year period.

Passing 10,000 homes is a significant milestone for Taylor Morrison, and I believe it positions us to take a big lead forward in 2020. We are extremely optimistic about the landscape today as markets are in a strong place to kick off the new decade. Economic indicators remain in our favor, and consumers have many reasons to be confident. Unemployment continues to remain at a 50-year low, personal income growth continues to pick up and consumer balance sheets are stronger than ever.

We see this manifesting in our sales offices, where we just came off our strongest Q4 sales performance in company history. This was a mix of William Lyons Home acquisition announcement and integration planning activity occurring in our company during that time. Sales pace was 2.6 for the quarter, up over 62%, compared to the same period last year, and orders were up 42% year over year. Keep in mind that Q4 was also our first comp that fully includes AV in the prior-year period.

It's especially notable that our Q4 pace actually tied Q2 as the high mark for the year, which obviously isn't typical given the seasonality we normally see during the holiday months, versus the usual strong spring selling season that falls squarely in Q2. This success led to a sales pace for the year, above our expectations at 2.5 on an ending average community count for 2019 of 351. Our sales success has continued into 2020 across all geographies and consumer segments, leading to a 46% growth in sales and a sales pace of over 3.0 for January. In fact, we're pleased to see a positive market that has paid off in strong movement in paces in the William Lyon business as well, which includes a resurgence of activity for them in the Pacific Northwest.

William Lyon saw a more than 30% increase in January sales over the prior-year period. With this strong momentum, we would be remiss if we didn't acknowledge the impact of having AV Homes fully integrated into the business in 2019. The initial investment thesis with AV was to expand our presence in entry level, first to where we were as a stand-alone company. Immediately following the acquisition, we had work to do to reposition some of the acquired assets, which our teams did rather quickly, allowing us to reap the benefits via strong sales in paces as the year progressed.

It probably won't surprise anyone to learn that the consumer segment with the highest pace during the fourth quarter was entry level, but it's important to note that we had strong sales success across all consumer segments, entry level, first move-up and second move-up were all up at least 50% in sales orders for the quarter. With the AV integration now well behind us, we anticipate our collective organizational experience with our prior five acquisitions to pay off tremendously during the work ahead with William Lyon, and we have already seen that play out in the early integration planning work. As those of you that follow our merger-related filings and announcements know, we are prepared to close the transaction this week. Both sets of respective shareholders approved the deal on Thursday, January 30th, and we're now completing the final steps before officially closing and moving forward as one combined company.

With each passing day, we have an even stronger conviction about the merits of this deal. The addition of William Lyon checked a number of strategic boxes for us. It allows us to increase scale in a number of our existing markets, gain entry into three markets that have been at the top of our watch list, add to our entry level exposure, and complement the Taylor Morrison culture and value with that of the talented William Lyon team. As part of this morning's earnings release, we also provided a flash of results for the William Lyon business, which were in line with our expectations.

The integration planning process began immediately following the announcement to ensure we are able to hit the ground running upon closing. As we've discussed during the AV transaction, we formed an Integration Management Office or IMO. That was led by our President of M&A, Lou Steffens and remained in place throughout the entire AV integration. A key lesson we learned during the AV process was that we needed more substantive representation from the acquired company.

So as part of this transaction, we've added a senior member from William Lyons leadership to the IMO in order to ensure that their knowledge base is properly transferred and that all team members from both companies are communicated to throughout the entire process. This means that our IMO actually consists of three key leaders today. Lou Steffens, William Lyon IMO lead and an IMO lead from within the Taylor Morrison business. Additionally, we knew with an acquisition as transformational assess, it would require the next evolution of our organizational structure.

To support our continued growth, we must think differently, operate differently and use our resources differently. In December, we announced a new corporate and regional structure, led by Eric Heuser, our chief corporate operations officer, and Dar Ahrens, our chief field operations officer, effective upon close of this acquisition. By splitting the company's operations into these two distinct groups, it will provide greater line of sight into our corporate functions and the way we support the growing field team and help us rationalize the regional areas, given the added scale from William Lyon. Our regional structure will move from three to five regions and be led by area presidents from both Taylor Morrison and William Lyon.

Throughout this process, we pursued a talent strategy very similar to what we employed during the AV acquisition, which included hundreds of interviews from both the William Lyon and Taylor Morrison team members. One of the toughest challenges in this industry is finding top talent in this demanding but necessary process, allowed us to identify talented individuals that will move forward as part of the larger combined company. During this time, we also identified the second of the two board members that will join the Taylor Morrison board, effective closing. When we announced the acquisition in early November, we were pleased to share that Bill H.

Lyon, William Lyons current chairman of the board would be joining our board. And now, we are delighted to share that Gary H. Hunt, William Lyons lead independent director, will also join us upon closing. I'm sure everyone's familiar with Bill, and we're excited about what Gary will bring to our board as well.

His diverse experience in real estate, politics, strategy and consulting will help round out the already impressive background that our board members bring to the table. In addition to our approach on the new organizational structure, we set ambitious goals to achieve by day one or soon thereafter. One of them being ensuring our teams in the overlapping markets are together in the same office space as quickly as possible. Fortunately, most team members will be able to achieve that upon day of close while some will get there shortly thereafter.

Plans are in place for all of the office space that won't be used going forward. And the Taylor Morrison website is ready to go live of all of the William line community information and all relevant branding decisions have been made in each market. We believe the key to a successful integration is moving as fast as possible from us and them to we, and these steps allow for us to begin that process immediately. Ensuring that we have the appropriate organizational structure at time of close was important, but equally important is the evaluation of every asset in the new combined company and the required go-forward positioning in each of our markets.

Our goal across the company is to ensure that we're investing in assets and areas of the business that are the best use of cash based on generating accretive returns. Using this criteria, we have completed the sale of all of our assets in the Chicago market. This impacted our financials during the fourth quarter based on the writedown required to complete the transaction. We've also taken some additional impairments during the quarter related to a small number of Taylor Morrison communities that will require some repositioning post close of the acquisition.

Similar adjustments will likely be required onto William Lyon assets as well, although those will show up within the purchase price accounting process. It's through each of these thoughtful and deliberate efforts that we've been able to outline an extremely strong combined business, and assure we have the best organizational structure and portfolio in place. Turning back to our results for 2019. We delivered 9,964 closings, which was nearly 14% higher than last year and near the high end of our most recently increased guidance.

Overall, it was a strong quarter, and it put an exclamation point on a very strong year for us. We were extremely active in 2019, and it's a testament to the organization, and its ability to deliver great results even when we're taking imperative steps to set the business up for an even stronger future. With that, I'll turn the call over to Dave for the detailed financial review.

Dave Cone -- Executive Vice President and Chief Financial Officer

Thanks, Sheryl, and hello, everyone. For 2019, adjusted net income was 323 million and adjusted diluted earnings per share was $2.98. On a GAAP basis, net income was 255 million, and diluted earnings per share was $2.35. Total revenues for the year were almost 4.8 billion, including homebuilding revenues of more than 4.6 billion.

Homebuilding revenues were up just over 12% from the prior year. As Sheryl mentioned, there were certain unusual items during the quarter that impacted many of our key metrics. The impact to earnings before taxes included almost 50 million for an increase in our reserve related to remediating a warranty issue that impacted our central region, 13 million for the write-off related to our Chicago exit, almost 11 million for transaction expenses related to both AV and William Lyon, 9 million for the impairments and almost 6 million related to the loss on extinguishment of debt due to the refinancing transactions earlier in the year. With all of this behind us, we're confident in how this sets up the business and strengthens the balance sheet for the future.

For the year, adjusted home closings gross margin was 18.2% when adjusted for the 53 million in unusual charges that impacted the metric. GAAP home closings gross margin for the year was 17%. Moving to financial services. We generated approximately 93 million in revenue for the year and approximately 42 million in gross profit.

We experienced continued strength during the year and actually achieved our highest profit per unit in company history during the fourth quarter. Our mortgage company capture rate for the year came in at 75%, compared to 71% during 2018. As we integrated the AV business into our financial services operations throughout 2019. It was notable to see that our capture rate actually increased every quarter throughout the year, ending in Q4 at 80%.

Sheryl mentioned that we evaluated our organizational structure headed into this transaction, and that applies to financial services as well. The go-forward organization will be focused on the combined builder business, and we will now benefit from an east and a complementary west coast fulfillment center in Phoenix to expand the reach of the financial services team which is based in Florida, with the smaller field teams embedded within each market. This will allow the team to better serve our customers across the country and provide a seamless experience across all time zones. SG&A as a percentage of home closings revenue, adjusted for the impact of unusual items was 10.4%.

On a reported basis, it was 10.6%. Adjusted EBIT margin was 8.6%, but 6.8% on an as-reported basis. Our effective tax rate for the year was 20.9%. The effective tax rate was positively benefited by recently approved energy tax credits.

For the year, we spent almost 1.2 billion in land purchases and development. At the end of the quarter, we had approximately 54,000 lots owned and controlled. The percentage of lots owned was 79% with the remainder under control. On average, our land bank had approximately 5.4 years of supply at quarter end based on a trailing 12 months of closings.

From a land pipeline perspective, we are almost exclusively focused on securing land for 2021 and beyond for the new combined company. At the end of the quarter, we had 4,711 units in our backlog with a sales value of approximately 2.3 billion. Compared to last year, this represents an increase of 13% in units and an increase of 9% in sales value. We also had 1,774 total specs at quarter end, which included 361 finished specs or about 1.1 per community.

This is down from the almost 1.7 finished specs per community that we had at the end of 2018 and is actually flat from our Q3 ending balance. The finished spec population that we entered the year with is helping position us for a strong spring selling season this year. When we add in William Lyon, we expect our spec population to increase, but we plan on working it back down closer to our historical averages over time, but do recognize that many of their positions operate solely as a high-turn inventory model. As I look back on the year, I'm proud of the work we were able to complete when it comes to capital allocation.

We completed the integration of AV Homes. We paid off 200 million in debt as the bridge loan for the acquisition came due. We exhausted our share repurchase authorization, which took our total shares repurchased after the AV deal up to 16.9 million for $296 million, and we continue to invest in our core business, which helped lead to record results we saw this year. From a liquidity perspective, we ended the year with approximately 850 million in total available liquidity.

326 million of that liquidity was cash on hand and the rest was from our 600 million corporate revolver, excluding normal course letters of credit that have been issued against it. At the end of the quarter, we had no drawn balance on the revolver, and our net debt to capital ratio was 37.2%. On a pro forma basis as of 12/31, the combined company would have had a net debt to capital ratio in the mid-40% range. As we look beyond the acquisition close date, this could reach as high as the 50% range as the year progresses and seasonal cash needs increase.

As we mentioned when we announced the deal, one of our focuses through this year and next will be continuing to reduce the leverage level. We have also worked to upsize our current corporate revolver to 800 million to account for the increased size and scale of the combined company. This will be effective as of the close of the transaction. The 2020 year should prove exciting with the closing and integration of William Lyon, which will have a significant impact on our operating and financial metrics.

As we mentioned in the William Lyon acquisition announcement in November of last year, we will be in a position to provide annual guidance on the combined business during our first-quarter call in late April. For now, let me wrap up by sharing our Q1 guidance for Taylor Morrison on a stand-alone basis. For the first quarter, we anticipate community count to be between 320 and 330. It's important to remember that our strong sales success in Q4 and January is having a short-term impact on our overall community count as several communities have or may be closing out sooner than expected while it's difficult to pull new community openings forward.

The community openings are more back-half weighted for 2020 and should normalize by the end of the year. Closings for the quarter are planned to be between 2,100 and 2,200. GAAP home closings gross margin inclusive of capitalized interest is expected to be about 18%. SG&A as a percentage of homebuilding revenue is expected to be in the mid 11% range.

The effective tax rate is expected to be about 23.5%. Our first-quarter metrics will be impacted by the closing of William Lyon, which will include a portion of February and all of March's operations. Thanks, and I'll now turn the call back over to Sheryl.

Sheryl Palmer -- Chairman and Chief Executive Officer

Thank you, Dave. Before we move to Q&A, I'd like to provide a quick update on our build to rent strategy and the continued progress of our new business unit during the fourth quarter. We officially closed on the purchase of our first site in Phoenix, and have started development work on this project, which is a big milestone for the initial effort. We anticipate closing on our second Phoenix project this month and are excited to start attacking the pipeline that's been built thus far.

We are also thrilled to announce that we've expanded our build to rent strategy to three additional markets outside of Phoenix, Dallas, Charlotte and Orlando. We believe our investment thesis fits well in each of these markets as need and demand for the product are apparent, and the local teams are excited to capitalize on the opportunities. We expect to continue our expansion into additional markets throughout 2020, and we'll have much more to report as the year progresses. As we've discussed, our expectation for build to rent this year is to continue growing the land pipeline and control additional properties within the identified build to rent market, as well as continue development work with some vertical construction by year-end with our initial projects.

We'll start leasing activities later this year with any material financial impact from our initial build to rent projects expected as we look to divest the projects in late 2021 and or 2022. I'd also like to take a moment to share a couple of recent announcements that emphasize what makes Taylor Morrison unique, all of which enhance the operational and financial highlights we've already discussed this morning. We were named America's most trusted homebuilder by Life Story Research for an unprecedented fifth year in a row. The very nature of building homes means our customers place an incredible amount of trust in us each and every day, and we, at Taylor Morrison, are determined to make that experience as magical as it can and should be.

With great trust comes great responsibility. It's what inspires and motivates us to continue to always do the right thing and put our customers at the forefront of everything we do. As we all know, trust is hard to earn and even harder to keep, so I'm especially proud of the longevity that we've been able to achieve and the discretionary effort that the team has put in to ensure the repeat of this honor. Also, I couldn't be more delighted to share that we've been honored for the second time with a Glassdoor Employees' Choice Award, recognizing the best places to work for 2020.

This is an award that recognizes the best places to work in America based on the anonymous input of employees. Taylor Morrison ranked number 42 out of the top 100 companies, and we're again the only homebuilder on the list. I believe that the feedback Glassdoor garnered was a direct result of our customer-first mentality that focuses on our internal customers as much as it does our homebuyers. In mid-2019, through a partnership with the Ritz-Carlton focused on enhancing our customer experience, we began hosting daily huddles across the organization where all team members come together at all levels of the organization to discuss our culture, customer service best practices, as well as timely, relevant business news.

These short 15-minute huddles reinforce our mission to find, train and retain leaders who inspire their teams through passion and authenticity through engaging two-way communication vehicles. I believe our commitment to focusing on the whole person with our employees, customers and homeowners sets us apart, not only in the building industry but in corporate America at large. Thirdly, I would like to quickly highlight our recent recognition as a repeat member of Bloomberg's Gender Equality Index. This list distinguishes companies committed to transparency in gender reporting and advancing women's equality.

Our recruitment philosophy has never been tied to meeting quotas, but rather to always hire the best person for each job. Our industry can benefit from greater diversity of thought, and I'm proud that the exceptional leadership and talent Taylor Morrison enjoys today grew organically and that everyone, regardless of gender or race, can see a home for themselves at Taylor Morrison.This recognition not only acknowledges the makeup of our current workforce, but our board of directors as well, where today we enjoy an almost 50% male to female split. And last but not least, I'm also very proud that we were added to Fortune Magazine's World's Most Admired Companies list for the second consecutive year. We scored best in the areas of social responsibility, innovation, people management and product quality, all areas that we care about deeply, so rankings for this honor are based on survey responses from industry executives and analysts who provide feedback based on company performance and reputation.

We've been fortunate to be the recipient of many awards, but there's something very special about being recognized by other leaders in our industry. To say that 2019 was a pivotal year in the company's history would be an understatement. And 2020 is already proving to be yet another one. It's hard to imagine there's more amazing things occurring within the organization outside of the acquisition-related activity, but it's true.

Just last Friday, it was announced that we would be joining the S&P Mid Cap 400 Index as of tomorrow. Our teams also continue to seek new and smarter ways of conducting business that will add to our transformational journey. Things like our recently launched chat bot Olivia, who in her first week alone generated more than 1,600 interactions and 400 conversions with successful appointments being booked every day. Taylor Morrison Home Funding has also made significant progress streamlining the mortgage journey through bots and digital transformation of the mortgage application process.

During the busy holiday season, TMHF was able to originate and close homes in record times actually as quick as nine days. Most importantly, as we expedite the process, we're providing an elevated experience at each turn for our customers. These are small but meaningful steps that our teams continue to take that improve the Taylor Morrison customer experience. I'll end our call today like I always do, by providing an enormous and heartfelt thank you to our Taylor Morrison team.

Their efforts day in and day out to deliver strong results while working diligently to ensure a smooth integration of William Lyon after closing is so inspiring. With that, I'd like to open the call to questions. Operator, please provide our participants with instructions.

Questions & Answers:

Operator

[Operator instructions] Our first question comes from Alan Ratner with Zelman and Associates. Your line is open.

Alan Ratner -- Zelman and Associates -- Analyst

Hey, guys. Good morning. Congrats on the quarter, and the earlier than expected close of the deal, very exciting. So first question, I guess, just thinking about the go-forward of the business, the decision to expand into five regions.

And obviously, it sounds like you've taken a kind of a deep look at the organization as you've been looking at the integration here. I know in the past, you've kind of targeted a sub-10% SG&A and this year, it was a little bit of a step backwards here and a lot going on, obviously. But how should we think about where the new kind of goalposts are with this current organizational structure. Are you still kind of targeting that type of level? Will there be any near-term impact from the restructurings? And I guess, just more broadly, understanding not giving annual guidance, but how should we think about just the go-forward business in terms of where you want it to be whether it's thinking about margins, absorptions, returns? Any metrics you'd be willing to at least directionally share would be helpful?

Dave Cone -- Executive Vice President and Chief Financial Officer

Sure. Well, I guess, I'll start, Alan, with SG&A. And you're correct. We're not changing our long-term vision on driving leverage on SG&A.

The increase in the scale from William Lyon, that's , obviously, going to help that leverage, but that will just take a little bit of time. We'll need to work through the integration. And we will have better insight into that when we get to our Q1 call. I'd tell you, on a legacy basis, we would expect to be flat to slightly leveraging even before the William Lyon acquisition.

We are continuing to invest and grow in our BTR business. Those revenues are going to come a little bit later. But as we look out longer term, we do feel like with the structure we have in place, we are going to be able to drive leverage going forward. And then, maybe on a couple of other ones that you hit on, I think you hit on absorptions and margins.

So I'll start maybe on the absorption side. Looking at '20, we would anticipate to be up relative to 2019 on a legacy basis. I think if anything, there will be maybe a little bit of a governor on pace, more around lot availability. Not necessarily demand , because demand is strong.

But with the William Lyon business, it is a higher pacing business. So part of our strategy there was to enhance pace going forward and we still firmly believe that. And then, maybe lastly, I'd hit on the margin. Again, just maybe a little color on the legacy side.

We would anticipate margins to be accretive, getting the benefits from synergies just from AV, where we see the strong demand. We'll have a little bit of noise, obviously, through the integration of William Lyon with purchase accounting, but again, the strategy around this is to drive scale, and we think going forward, we have upside potential on margin.

Alan Ratner -- Zelman and Associates -- Analyst

Awesome. I really appreciate that data. That's very helpful. I guess, just secondly, very impressive order growth.

I think you and your peers, obviously, are putting up some strong numbers this quarter, January sounds like it's off to a great start as well. You kind of touched on it a little bit with the margin outlook and maybe on the flip side, the lot count, perhaps becoming a bit of a governor. But what are you doing on the pricing front at this point? Is there more aggressive price increases coming, given the fact that it seems like communities are closing out faster, maybe lot count becomes an issue. Labor might become tighter as the year goes on.

What does that translate to in terms of pricing power right now?

Sheryl Palmer -- Chairman and Chief Executive Officer

Yes. Good question, Alan. I think, as you can see, we're quite focused on driving pace in each of the communities even at the expense of a little bit of community count. I do think there's still pricing power among all segments.

If you just look at the simple economics of demand, specifically in the entry level, we're seeing it, but I think there's also a sensitivity across the sector that people don't get ahead of ourselves, and certainly, at that entry level that -- we're a little more disciplined and sensitive to the impact of the buyer. I think what's most important as we look at kind of managing pace and prices, given the labor market, as you mentioned, is that we really match paces to construction capacity, and so it's really our plan to continue to maintain a production cadence so that the trades can plan accordingly, and we don't put them in a difficult position.

Alan Ratner -- Zelman and Associates -- Analyst

Got it. Thanks, guys. Good luck with everything.

Sheryl Palmer -- Chairman and Chief Executive Officer

Thank you.

Operator

Thank you. Our next question comes from Jack Micenko with SIG. Your line is open.

Jack Micenko -- Susquehanna International Group -- Analyst

Hi, good morning. First question. You know, Sheryl, in past deals, you've been pretty active around share repurchase following the closing. And you talked about leverage, maybe ticking up through the year is just the normal production cadence occurs.

But how are we thinking about buybacks relative to that leverage level that you talked about 38, maybe moving up into the low 50s temporarily. How do we think about that in the context of some of the prior deals you guys have closed?

Dave Cone -- Executive Vice President and Chief Financial Officer

Jack, I'll take that one. As you know, we like share repurchases as part of our overall strategy. Since Q4 of 2018, we've purchased almost $300 million in stock. For now, we'll need to wait until we close the transaction before we likely go out and seek a new share repurchase authorization.

The combined business is expected to generate sufficient cash flows going forward. But I'd also say given where current interest rates are, we might have a little bit more of a bias toward looking at the debt, potentially refine some of the debt that we're getting through the William Lyon transaction and even possibly paying some of that down, so we're going to continue to take a balanced approach to capital allocation. You've heard us talk about it before reinvesting back into the business, looking at M&A opportunities, which obviously, with William Lyon, we're checking that box, going to debt leverage and then looking at share repurchase, and it's going to be really a function around our free cash flow. And in this case, where interest rates are, they're very favorable right now, and we feel like that's something we might want to take advantage.

We'll be opportunistic.

Jack Micenko -- Susquehanna International Group -- Analyst

All right. That's helpful. And then, you've got the five acquisitions since, I guess, 2015 or 2015 or so, and a number of those were or have been really first-time oriented as is the William Lyons deal, I asked another company this quarter. What's the Taylor Morrison brand at the entry level going forward now that you combine all that? I mean, you've got some competitors doing very small footprint, very stripped down, you have built to order, and you've got everything included.

Where is Taylor going to compete in the entry level from a branding perspective?

Sheryl Palmer -- Chairman and Chief Executive Officer

I think I'll take a stab at that one. I think everyone's playing this first-time consumer a little bit differently, and you're absolutely right. The first-time buyer penetration has been a key focus of the organization. But I think it's really critical that we look at this consumer market by market, because we've talked before, we do serve that very affordable first timer in some markets, and we do that through simplified products, maybe attached product, very simple spec levels, and little choice for the consumer.

And for those folks, it's really about being in the right house, quality home in the right place at the right price along the first-time continuum, though, we also serve what we've coined the professional first-time buyer. And with that consumer, we do give them a little bit more choice, and they do spend a little bit more money and time really customizing the specifications to their liking. So when we talk about our first timer, I think it's a pretty broad breadth across the portfolio, very affordable to truly something that would be right on the edge of that first-time move up. I think with the William Lyon penetration, we definitely are going to have a greater penetration of that more affordable, I would say, our overall entry level position will probably move up somewhere around 5 or 6 percentage points, and we'll have a larger piece of the spec business as Dave discussed, where that would really be a much more simplified product.

Jack Micenko -- Susquehanna International Group -- Analyst

All right. Thank you.

Sheryl Palmer -- Chairman and Chief Executive Officer

Thank you.

Operator

Thank you. Our next question comes from Michael Rehaut with JP Morgan. Your line is open.

Michael Rehaut -- J.P. Morgan -- Analyst

Thanks. Good morning everyone, and congrats on getting the deal done a little earlier than expected.

Sheryl Palmer -- Chairman and Chief Executive Officer

Thank you, Michael.

Michael Rehaut -- J.P. Morgan -- Analyst

First question I had was on the deal, and I know Sheryl, you have a lot of comments. And obviously put a lot of work into the deal. Or what you expect from the combined company going forward upon your close. I was hoping to get maybe a little additional perspective from the standpoint that you've done several deals over the past few years.

William Lyon will be the biggest. We've also had a couple of other deals out in the industry, some that haven't gone as well or were more criticized as have not gone as well, specifically CalAtlantic extend patch, which investors had different views on. Lennar's takeover of CalAtlantic, I think was a bit different and perhaps a bit more successful. But as you look at the deals that you've done and some of the others in the industry, what are the two or three things that you're particularly mindful of that you feel can put the acquisition of William Lyon on the right path over the next year or two?

Sheryl Palmer -- Chairman and Chief Executive Officer

Yes. That's a really easy -- complicated topic and easy answer for us. As you go through the process, Michael, obviously, you go through the due diligence, you underwrite all the assets, price has to work. But the most difficult thing to underwrite and the most important piece of any transaction is making sure you have the people right.

Because at the end of the day, if you don't properly staff, and you don't have the right people, you don't integrate the cultures. You actually have very little chance to have a successful acquisition. And so, I would tell you -- and I think I spent some time in my prepared comments talking about the depth in which we go through this, and there's not one methodology, but ours is, we're going to put the best team in the field. And every role, even though we have a wonderful organization within Taylor Morrison, we're acquiring this business not to rip it apart, but to actually enhance it, and that's by bringing their history, their people, their processes, seeing what's better than ours and having a very open mindset to that, so we start with the people.

We go through a very diligent process of interviewing for every single role and making sure that we have the best team in the field. And then, it's really, as I said, getting to it very quickly, and making sure that we have an open mind to understand the best of both organizations and that becomes the go-forward strategy.

Dave Cone -- Executive Vice President and Chief Financial Officer

And I'd double down on that a little bit and say, even the best integration plans have bumps. And you have to plan accordingly for those bumps and a lot of things that Sheryl's done around dedicating the necessary resources to do this, where there's a little bit of cost upfront, the dividends that it pays on the back end are tremendous. Financially, for sure, but also just from a morale standpoint for our team members, to know that they're supported during this process, which as you know, is difficult at times as you go through an integration.

Sheryl Palmer -- Chairman and Chief Executive Officer

So I'd add one more last thing on it, Michael. Communication's the key and it's key through the entire process. So we have been talking to team members in both organizations since the day of announcement. We send multiple memos a week.

It's really about keeping everything in front of them. The daily huddle that I spoke about is going to be critical to the success , because we will be putting our arms around the entire organization on a daily basis and getting to know people. I'll tell you, if it isn't for the last five transactions and the muscle that we've kind of developed, we would not have been prepared for the quick trigger on this one as we said in the November call. We didn't think this was going to happen until the end of March, things moved very quickly.

That's great news, but my confidence is really because of kind of the IMO team and what they've been able to do to get us ready for this week.

Michael Rehaut -- J.P. Morgan -- Analyst

That's great. I appreciate that. And obviously, best of luck this year as you execute those plans. I guess, secondly, I want to circle back to SG&A, I think there's an earlier question on it.

And if you look back over the last four or five years. Since 2015, the SG&A has been kind of flattish in the, let's say, roughly 10 to 10.5% range despite revenues going from 2.7 to, this year, around 4.7. And understanding, obviously, that you're building out the organization. There's a lot of investment involved in that.

There's been different systems and functional investments. But I think going forward, when you look at the lower valuation multiple, I think trying to drive a better operating margin, better returns will be critical. So Dave and Sheryl, I mean, as you look at over the next two or three years, what do you think the real opportunity is in terms of that number? Because you talked about, on a legacy basis, maybe being flat to down a little bit, but how do you think about where that number should be over time? And what would the leverage be to get there?

Dave Cone -- Executive Vice President and Chief Financial Officer

Sure, Michael. I think I'd first start by going to our SG&A rate. I think if you look at it against the peer group, I would argue, it's actually very competitive. And you're right, we have made investments.

I mean, through the different acquisitions we've done, we have made several investments around system in our purchasing function, our construction cycle. And as Sheryl mentioned, that was part of creating that muscle to allow us to do the acquisitions and to be successful at integration, so those are actually things that we're very proud of, and it lays the foundation for where we are today and where we're going forward. William Lyon for us is going to be transformational. This is going to change the game for us a little bit.

We're not in a position to go and book long-term SG&A rates right now , because, as we said, we want to get at least a couple of months under our belt, establish guidance for this year. But I'll tell you, as we look out strategically, once we decided to move forward with William Lyons, leveraging SG&A, having accretive margins, generating additional cash, it was all based on enhancing our returns going forward. But in the short term, we have to get through the process of the integration, but when we come out the other end, we think we're going to be well positioned. We're going to continue to be very competitive in our sector and take advantage of market conditions.

Sheryl Palmer -- Chairman and Chief Executive Officer

And I think to your earlier point, Dave, when we come out the other end of the integration and when we actually have the revenue streams from BTR and not just the investment side, so a lot of good stuff ahead.

Michael Rehaut -- J.P. Morgan -- Analyst

Thank you.

Sheryl Palmer -- Chairman and Chief Executive Officer

Thank you.

Operator

Thank you. Our next question comes from Mike Dahl with RBC Capital Markets. Your line is open.

Mike Dahl -- RBC Capital Markets -- Analyst

Good morning. Thanks for taking my questions.

Sheryl Palmer -- Chairman and Chief Executive Officer

Hey, Michael.

Mike Dahl -- RBC Capital Markets -- Analyst

Hi. I wanted to come back to the absorption question. I think that Alan kind of asked around it earlier, but in the press release, you talked about those January sales translating to over three sales for the month. It seems like, actually if you look at the numbers, it could put 1Q on pace for more like three and a half or so a month.

That's a number even north of three that as a public company, at least Taylor Morrison hasn't produced in any quarter. So just wanted to follow-up and just ask, is there something structurally different about the way that you're looking to manage the business on a go-forward basis with respect to pace versus price, notwithstanding the mix impact coming from William Lyon. But on the legacy, is there any evidence that you're seeing, I guess, secondly, that this is kind of a pull forward alongside the pullback in rates or anything like that?

Sheryl Palmer -- Chairman and Chief Executive Officer

I don't think anything structural at all, Michael. Like I said, and I think we've been talking about for a couple of quarters that for a long time, you saw us have a very strong bias to margin and price. And it's that it started moderating we probably have more of a corporate bias to pace and the advantages that that gives you market by market, but at the end of the day, it's a community by community decision on pace over price, even though we've certainly wanted to see the benefits of that acceleration. Is there a pull forward? We ask ourselves this every time.

If you think about the last two, three years, and there's some strong activity out in the field, we say, is this a pace pull forward? I don't think rates are pulling us forward. In fact, I think I even saw this morning that rates are likely given the concerns around the virus, we could even see rates pull back even more or drop a little more, so I don't think so. I think all the things -- it's almost a perfect storm in a good way around what we're seeing on the way the consumer is feeling. Inventory's tight.

I mean, inventory is tight across the markets, and that is creating some of the energy and excitement as you go market by market.

Dave Cone -- Executive Vice President and Chief Financial Officer

And I'd also throw in that when you look at AV, when we acquired them, they were a higher pacing business, and we had to get through the integration. And as Sheryl talked about in our last quarter call, we completed the integration. And I think what you're seeing is now that efficiency that we expected out of that business, really coming through our numbers as well.

Sheryl Palmer -- Chairman and Chief Executive Officer

Yes. And we're delighted to see that with the entry level. But as we said in our prepared comments, we are so excited to see that strength across all consumer groups and to see that first and second time move-up. Buyer are also up 50% year over year.

It's tremendous.

Mike Dahl -- RBC Capital Markets -- Analyst

Got it. Yes, it's great to see the rebound extending into move-up and beyond entry level there. Second question just around margins and I understand that you're going to hold off on providing pro forma guidance until next quarter, but specifically, as we look to build out models and think about those purchase impact -- accounting impacts, Dave, that you mentioned and any way you can size those, the numbers specific to purchase counting? And when you talk about margins up, gross margins up year on year on a legacy basis, but some noise, should we still think that margins, even inclusive of purchase accounting, are flat to up? Just anything you can give us there?

Dave Cone -- Executive Vice President and Chief Financial Officer

Yes, I'll speak a little bit more to the legacy side and then I'll touch on purchase accounting. But yes, like I said, on a legacy basis, I would expect our margin to be accretive year over year from the benefits from the synergies that we've seen through AV. Obviously, the strong demand is playing a bit of a factor from a cost perspective, input costs have been somewhat normalized, and we're looking at our backlog, that gives us some confidence into the first half of the year. We're seeing strong margins.

But you're right, the William Lyon transaction will have an impact on purchase accounting. And I tell you, right now, this is a core focus for us as we begin this integration process, but there's a lot at this stage that we don't know. We know overall purchase price for the transaction. But we'll have to do a deeper dive around fair value of the assets and see how that allocates out, so we are not in a position to share that right now.

It would be kind of a pure speculation at this point. But maybe one thing I would leave you with is, we did the AV transaction around one-time book. We're doing this transaction roughly around one-time book. But we have a little bit more work to do, and it will take us all the way through next quarter, but we'll have it for you in our Q1 call as we guide for Q2 and the full year.

Mike Dahl -- RBC Capital Markets -- Analyst

OK. Understood. Thank you.

Operator

Thank you. Our next question comes from Truman Patterson with Wells Fargo. Your line is open.

Truman Patterson -- Wells Fargo Securities -- Analyst

Hi, good morning everyone. First, just wanted to touch on gross margin. It's been a little messy over the past year with purchase accounting, there was the market deceleration and increasing incentives, so it's been difficult to see what kind of gross margin synergies have flown through from the AV acquisition. Can you just walk us through or possibly quantify what kind of synergies you guys have seen that have actually flowing through your P&L to date?

Dave Cone -- Executive Vice President and Chief Financial Officer

Yes, you bet. We talked a little bit about it last quarter that our overall synergy number as we moved through AV transaction ultimately ended up at 50 million. About two thirds of that ultimately goes through the margin. But at the end of December, we're about 15 months in there.

It takes us, call it, 12 to 18 months for that to fully go through, so we're still seeing that benefit come into play as we move into 2020. When -- and you're right, I mean, it's noisy with transactions. What we saw last year was the impacts of purchase accounting. And then, for example, AV, they had a lower margin rate than we typically did.

So as the purchase accounting benefits started to wane, we started to see improvement on the underlying margin rate as we got better costs, more efficiency out of that. But it does take some time. And like I said, here in the next quarter, we'll probably hit -- at that point, hit kind of more of that annualized run rate going forward.

Truman Patterson -- Wells Fargo Securities -- Analyst

OK. OK. And then kind of a multipart question on community count. You all guided first quarter down about 10 to 15% year over year.

How should we think about the cadence through the year? Will it actually inflect positive by the end of the year? And then, regarding the William Lyon acquisition, it's generally thought of in the industry that M&A leads to a bit of a slower growth rate than what maybe the pro forma combined company would suggest as managers focus on integration, community count openings become a little more difficult. The land bank even sometimes suffers. I guess, what kind of safeguards do you all have to kind of keep that community count and growth rate from gapping out?

Dave Cone -- Executive Vice President and Chief Financial Officer

Let's start with community count for 2020. Again, on a legacy basis, I would expect us to be, call it, probably flat to slightly up relative to Q4 of this year, so our average community count was around 333. And as we talked about in the prepared remarks, we'll see a little bit of a dip in the first quarter. We have communities coming online late second quarter, but more second half weighted.

But we'll see that, again, kind of flatten out -- to be flat to slightly up by end of the year.

Sheryl Palmer -- Chairman and Chief Executive Officer

The only thing I'd add to that, Truman, is you're right. When you pull these together, there's lots of work to do. And I think if you look at kind of William Lyon sales trends in the quarter when the deal was first announced, I think it was a slower start as it was all being digested into the organization. They saw that pick up as the year went on and people began to understand what the future looks like, and certainly, they've seen it coming into January with a very good sales and pace in January.

And we've seen it across the board for them, really delighted, as I said earlier on the Pacific Northwest where paces were among the top in the organization, so I think that it will be our intent to be able to integrate these and really not see too many blips on the community opening side , because our teams are already starting to work together on that.

Truman Patterson -- Wells Fargo Securities -- Analyst

OK. Thank you.

Operator

Thank you. Our next question comes from Jay McCanless with Wedbush. Your line is open.

Jay McCanless -- Wedbush Securities -- Analyst

Hey, good morning. So, the first question, Sheryl, if I think about the pro forma company after the transaction, where do you guys believe your entry level versus active adult versus move-up, how are those buckets going to look maybe on a percentage basis?

Sheryl Palmer -- Chairman and Chief Executive Officer

So, you know, we've normally talked about, Jay, of kind of that third, third and third, right? And that can -- that first-time buyer is kind of a third of the business, and that's the makeup of that entry level, maybe a little bit moving into the first move-up, the kind of middle of the market is, and then, that 50-plus is a third, not specific to active adult communities, but really where they show up in the total portfolio. My expectation, as I look at the blended business and I look at the lots, kind of the go-forward lots of the two organizations, is you're going to see probably that first buyer, entry level buyer, move up a few percentage points. And I think you're going to see that first-time -- that first move-up buyer probably move up a few percentage points, and you'll see the second move-up, luxury business slightly reduced.

Jay McCanless -- Wedbush Securities -- Analyst

OK. That's great. And then, the second question I had, in terms of thinking about our forward model, is there going to be a meaningful change, if we just took the community count for William Lyon and Taylor Morrison today and then, fast forward it a week after you guys have closed the deal? Is there going to be an immediate impact on the community count combined businesses after closing or as we're thinking about our model, we should assume that roughly the same amount of communities for the blended business are going to be operating for the next two to three quarters?

Sheryl Palmer -- Chairman and Chief Executive Officer

Yes. I think the only feedback I'd throw in, and Dave if you concur, is that both -- with the sales success, both businesses you're seeing, we're seeing closeouts move quickly. We're seeing moving into some closeouts a little earlier than we anticipated, and that shows up in the guidance that Dave just shared. I think they are seeing the very same thing.

And as we analyze the portfolio, the early work that we've done, there might be a few positions that we might think long-term don't make sense in the portfolio, and we might have a different strategy. Generally, I'd say that's correct that the bias is probably a little lighter given the strategy on some communities.

Jay McCanless -- Wedbush Securities -- Analyst

Sounds good. Thanks for taking my questions.

Sheryl Palmer -- Chairman and Chief Executive Officer

Thank you.

Operator

Our next question comes from Carl Reichardt with BTIG. Your line is open.

Carl Reichardt -- BTIG -- Analyst

Thanks. Good morning, all. I just have one. Truman got my other one.

And I guess, the crude way to ask it, Sheryl, is, are you done doing deals? A nice way to ask it is, if you look at the footprint post close, and the scale and depth of share you think you'll have in a relatively stable market, is your footprint kind of where you want it to be? Is your scale where you want it to be as it sits now?

Sheryl Palmer -- Chairman and Chief Executive Officer

So I like your crude approach, direct is good. We are head down, and I can't even sit here today and think about another large transaction. We're very busy. I think you'll see us busy for a little while here.

We're going to make -- just like we had to make sure AV was appropriately integrated, and we were ready for this, we would have to do the same before we'd ever consider anything different. When I look at the strategic benefits of this transaction, and I look at the market dynamics of Denver being one of the markets that I would say with subscale, and what's happened there. I look at Austin doubling the size. I look at what it's done to our California footprint.

I'm very delighted, as well as the added markets of the Pacific Northwest and Las Vegas, so I think we feel like we're in a very good place. I could never comment on what, 12, 18 months, 24 months from now hold, but I'm not really thinking about that right now, to be quite honest. I think we're in a very good place. We like the portfolio, and I don't see any big deals imminent at all.

Carl Reichardt -- BTIG -- Analyst

Thanks a lot.

Sheryl Palmer -- Chairman and Chief Executive Officer

Thank you.

Operator

Thank you. Our next question comes from Alex Rygiel with B. Riley FBR. Your line is open.

Alex Rygiel -- B. Riley FBR -- Analyst

Thank you. Two quick questions. Could you give us a little bit of update on William Lyons in the month of January as it relates to sales pace and order activity? As well, could you quickly run through sort of a regional update on sort of what else you're seeing, feeling in the trenches?

Sheryl Palmer -- Chairman and Chief Executive Officer

Yes, I'd be happy to. So as far as the preliminary numbers that we've seen from William Lyon, I think that the sales in January, like I said, was quite strong. I think they had a pace of something close to three and a half, so that's tremendous. I think it was slightly ahead of their expectations, and I think each week, they saw the business pick up, so excited about that.

And as I said, when I look at the paces of the last four weeks, compared to their last eight, 12 weeks, the activity has been good. If I do a quick around the world for you, I would tell you, generally, things are feeling nice across the board. I think before I do a quick tour, it probably makes sense to talk about some of the markets that, let's say, over the last 12 months, we've seen maybe a little bit more challenged, maybe some inventory creep, maybe some pricing resistance, and I'd start with the Bay. They saw a tough back half of 2018 and then, a little resurgence in Q1 of '19, and then, pace has dropped considerably as we moved through the year.

Having said that, it feels like the last three months, we've seen some pickup in traffic and sales activity. And even seeing pricing power back in some of the submarkets. January felt pretty good with their sales slightly above their budget. And interestingly enough, it seems like we saw an impact with the January Chinese trade deal signing seeing some of those buyers back in the communities.

As I move through the rest of the state of California, SoCal repositioned the business over the last couple of years, and our ASP is down more than 30% year over year. And so, when I look at how that started last year and then, the movement through the year, quite favorable. Discounts reduced each quarter through the year, and it feels like they're on very predictable footing, and they've come out of the gate very strong in January. And obviously, that business is going to change dramatically with the add of William Lyon.

Sacramento, steady as you go. I mean, it's just been really good. Last three quarters in the market and in the company, we've seen strongest sales we've seen really in the decade. But there's a lot of new entries that have come into -- a lot of new competitive entries in Sac.

Dallas, I would tell you the other market that I think, over the last year, there was a lot of noise, greatest inventory challenges last year, a lot of national press. Pricing can run just too hard. That's the place we probably had the most repositioning to do to work through some of the AV assets, but it feels much more consistent than we've seen in some time. Jobs are good.

Inventory is actually tightening up. I think the team has done a really nice job there. If I round out Texas, just strong. Austin, I think our opportunity challenge there is making sure sales don't get ahead of our ability to get lots on the ground, and we keep pace with production capacity.

And Houston seeing great results year over year with grace -- with growth and pace per community. I'm excited to see that business really. The Austin business probably double in size and the add of the William Lyon Houston start-up business. Carolina, great activity.

I'd say the markets are slightly down year over year, but we see that over the last few months, we've seen that begin to improve. Probably the most notable trend we've seen in the Carolinas, specifically in Charlotte is kind of a shift from single-family to multifamily. We're always probably where we had a lot of repositioning to do from AV as well, and I think we're starting to see the fruits of the team's hard work. That's left.

Florida, tremendous growth year over year and quarter over quarter in each of the markets, both in Taylor Morrison and the market as a whole. We didn't specifically call out active adult as having a year-over-year growth like the other consumer sets, and that was really a function for us positions being closed out in our large Esplanade communities and a lot of new positions opening up early this year. And let me finish with Atlanta, strong, Denver, strong, all about lot availability. Once again, that business is going to change dramatically.

And Phoenix, God, just continues to charge hard. Phoenix is the only business that will be affected by -- that is affected by both the AV and the William Lyon acquisitions, but they've handled it masterfully. They're humming along with sales up more than 30% in January. It's really a production machine for the business, and I think really reaping the benefits of what scale in a market can do and what the planned production cadence can really do.

And probably worth noting that if I look at Phoenix in 2019 on a pro forma basis, I think we would have been No.1 in revenue, so a really big move for Phoenix.

Alex Rygiel -- B. Riley FBR -- Analyst

Thank you.

Sheryl Palmer -- Chairman and Chief Executive Officer

You bet. Thank you.

Operator

Thank you. Our next question comes from Matthew Bouley with Barclays. Your line is open.

Matthew Bouley -- Barclays -- Analyst

Good morning. Thanks for fitting me in here. I wanted to ask on the pricing power side again. Sheryl, you gave some color around pricing power still being sort of fickle.

Obviously, incentives have left the market, maybe that's a piece of it. But I guess, it would just be great to hear your perspective around sort of if or when pricing power could return to the market? I mean, we've already seen resale inventories tightening. Demand is strong. Rates are favorable.

I guess, what else would it take to kind of bring pricing back into the market from your perspective?

Sheryl Palmer -- Chairman and Chief Executive Officer

You bet. Well, I think we do have pricing power in the market. I think what you're seeing is the builders act responsibly to make sure that we don't shut this off, so I'm a fan of taking a much more measured approach, and as you -- when you look at long -- communities with long shelf life, you want to be really careful where you really see some opportunities as you're closing out a community, if you know that there's not a replacement opportunity. So I won't say we don't have pricing power.

In fact, I do think we have pricing power, and we're seeing it in all markets. I think the difference is, instead of seeing 5,000 a shot. We're probably being a little bit more responsible and metering it out a little bit more carefully to make sure that we don't get over our ski tips.

Matthew Bouley -- Barclays -- Analyst

OK. Understood. Appreciate that. And then, secondly, just on the synergy side, I appreciate the full guidance is still yet to come.

But I guess, just ahead of the deal closure with Lyon, have you guys been able to sort of get a head start around the synergies, whether it's on the material or land sourcing side? Just kind of any updates on how you're thinking about that?

Dave Cone -- Executive Vice President and Chief Financial Officer

Yes, Matthew, we're in the same spot, maybe where we were when we announced the deal. So what we're expecting right now would be a run rate target of around $80 million. Again, probably take us 12 to 18 months to work through that. We're continuing to work on identifying local, regional and national synergies, probably 75% of the synergies are going to come from overheads through consolidation of our divisional and corporate offices.

I would say that we're starting with 80 million. We hope to deliver something more. But again, it's early in this process. We have work to do, and each quarter, we'll come back with an update as to where we think synergies are trending.

Matthew Bouley -- Barclays -- Analyst

OK. I appreciate the details. Thanks again.

Operator

Thank you. And that's all the time we have for questions today. I'd like to turn the call back to Sheryl for any closing remarks.

Sheryl Palmer -- Chairman and Chief Executive Officer

Thank you very much. I appreciate everyone joining us today as we talk about our Q4 results and, more importantly, the exciting year ahead. Have a great day.

Operator

[Operator signoff]

Duration: 72 minutes

Call participants:

Jason Lenderman -- Vice President, Investor Relations, and Treasury

Sheryl Palmer -- Chairman and Chief Executive Officer

Dave Cone -- Executive Vice President and Chief Financial Officer

Alan Ratner -- Zelman and Associates -- Analyst

Jack Micenko -- Susquehanna International Group -- Analyst

Michael Rehaut -- J.P. Morgan -- Analyst

Mike Dahl -- RBC Capital Markets -- Analyst

Truman Patterson -- Wells Fargo Securities -- Analyst

Jay McCanless -- Wedbush Securities -- Analyst

Carl Reichardt -- BTIG -- Analyst

Alex Rygiel -- B. Riley FBR -- Analyst

Matthew Bouley -- Barclays -- Analyst

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