Ara Hovnanian: Just to add to that, when we did the refinancing in the fourth quarter, we intentionally left if you look at the maturity ladder slide that we provided, we intentionally left tranches of relatively small amounts of debt that’s coming due in ‘26, ‘27 and ‘28 that’s there for us to continue to pay down.
Alex Barron: Okay. Yes, that was going to be my next question. If you did continue to pay down, is there a specific order that you’d have to go down?
Ara Hovnanian: We would likely look at it in order of where we don’t have to make significant prepayment penalties, but you have to balance that with whatever the rates are in the individual notes. We don’t have an order that we need to take out the near-term maturity. We can do it in whatever order we want, but it has to do with what it would cost us to take out each piece and when.
Alex Barron: Okay. The good news is your leverage is coming down pretty quickly. I think by the end of the year, you should be pretty similar to most other builders. That’s very, very good progress.
Ara Hovnanian: My guess is we’re making there for sure.
Alex Barron: Yes, most definitely. Now in terms of your margin outlook, as it pertains to incentives, I think you guys noted, you’ve seen improvements in sales so far in January and February. Are you guys more likely to pursue higher sales pace and maintain the incentives the same? Or are you guys more likely to accept the lower sales pace but try to reduce the incentives?
Ara Hovnanian: I would say pace is very important to us, but we look at every community, community-by-community and while trying to maintain the pace in that community, we will tweak pricing or reduce concessions, small amounts to continue to improve our margin without shutting off the sales pace. So, it’s a balancing act, but pace is definitely important to us.
Alex Barron: Okay. And if I could ask one last one, as far as the phantom stock expense going forward, that’s basically, impacted by the movement in your stock price relative to each previous quarter?
Ara Hovnanian : That’s exactly right. So, when we — each quarter end we adjust the phantom stock expense based on the stock price on the last day of the quarter. And so, the guidance, as we’ve said, the guidance are given for the second quarter assumes that the stock price stays the same as it was on January 31st at the 168, I think it was. So, if it moves up or down from there, we either can get a benefit or additional expense associated with that stock price movement. That’s right.
Alex Barron: And is that somewhat indefinite or when would those pluses and minuses sort of change go away?
Ara Hovnanian : The most recent grant that has phantom stock expense was in December of ‘23. So that particular grant will have the exposure to this stock price over the next few years. We did have, one of the early ones was 2019, that one is now completed. So, the exposure to that one ended actually in this first quarter, the final payout was made. So, it just depends on the grant. And when that grant gets paid out.
Brad O’Connor : I’ll add that given the stock price has been much healthier recently, it’s very likely impossible that we’ll reduce our use of phantom stock in the future, and our older ones are expiring.
Alex Barron: Yes. I was going to say, is there any benefit to using this method versus giving people — to some other compensation?
Brad O’Connor : The benefit is that we foresaw our earnings increasing and didn’t think it would be a good idea to dilute our current shareholders. We thought they benefit more from the lack of dilution than the small expense on a given quarter. Again, if you go back quarter-by-quarter, I believe the data’s in the appendix. You can see on an annual basis, it really hasn’t amounted to much. It is been up and down. One quarter is up 5 million, one quarter is down 5 million. But on any individual quarter, yes, it makes a difference on the quarter.
Operator: [Operator Instructions]. I’m showing no further questions in the queue. I would now like to turn the call back over to Ara for closing remarks.
Ara Hovnanian: Great, thank you very much. As we said, we’ve been pleased with the results and the market overall just feels like it’s continuing to strengthen. So, we’re looking forward to a very good ‘24 and look forward to reporting more good news next quarter. Thank you.
Operator: Ladies and gentlemen, this concludes today’s conference call. Thank you for your participation. You may now disconnect.
