Glenn Keeler: Yes. Yes. Doug talked about it a little bit earlier but just to give a few more details. From Q4 to Q1, it’s largely flat. So really strong margins in Q1. But then what you’re seeing, there’s a little bit of land vintage too, because we’re opening new communities and closing out of older communities. So that plays a part into the full year guide. But overall, like Doug said, it’s early. And so as the spring selling season unfolds, if we can continue to see strong demand, that will have an impact on margin.
Operator: Our next question comes from the line of Jesse Lederman with Zelman & Associates.
Jesse Lederman: Congrats on the strong results. At your Investor Day in May 2022, you discussed your expectations for ASP to trend lower as your business shifts from California and you start smaller homes. Can you talk a little bit more about the latter? How has the reception been from home buyers for some of the attached and smaller product? And is that still the plan with the affordability equation becoming a bit more balanced here with rates having pulled back?
Glenn Keeler: Yes, good question, Jesse. It’s definitely still part of the plan and we’ve executed on that plan. Even in our — what most people would consider higher priced areas like California, we’re doing a lot more attached than we used to in items like that with an eye towards affordability and pace and that’s worked out well for us. But overall, you will see our ASP trend down a little bit compared to where it’s been. And some of that is just mix though, obviously, with more central and east deliveries from Texas and the Carolinas where the ASP is a little bit more affordable in those markets.
Jesse Lederman: Great. That’s helpful. One question on price point differentiation. Are you seeing any particular segment stronger, weaker as the year rolls over here?
Glenn Keeler: Another good question. In the fourth quarter, we actually saw pretty consistent demand across all our segments from entry level to first move up. So overall, pretty strong margin profiles are actually fairly consistent as well. So I think all segments are working well.
Jesse Lederman: And that’s continued even with the strong start to the year, have you seen any segment lag or be particularly strong? Or is it pretty consistent across that?
Glenn Keeler: Pretty consistent.
Operator: Our next question comes from the line of Jay McCanless with Wedbush.
Jay McCanless: First question, could you talk about where cycle times are now? And how much further, if at all, you need to get back to pre-COVID levels?
Tom Mitchell: Good question, Jay. This is Tom. We’re really pleased with the cycle time improvement as it was one of our key initiatives last year. And I’d say we’re back to pre-pandemic cycle times average or template of what we’re striving for is a 115-day production schedule and we’re pretty close to being right on schedule. So we may have the ability to extract a little bit more out of that as we’re looking at new templates to potentially reduce cycle times even further.
Operator: Our next question comes from the line of Mike Dahl with RBC Capital Markets.
Mike Dahl: Just another follow-up on kind of the price incentive trend that’s encouraging to hear that February to date has come down further, we have had a bit of an uptick in rates in Feb versus Jan. It sounds like things are still kind of strong on the ground and you’re dialing back incentives. Can you talk a little bit more to that? Do you think you’ve still been able to secure kind of advantaged rates and therefore, your — you haven’t seen that impact yet? Or you think as we move through the very start of the spring selling season, the demand has just been strong enough that this uptick in rates hasn’t had really any impact here?
Douglas Bauer: Hi Mike, it’s Doug. As we — Linda mentioned earlier, incentives on orders in the quarter were 4.8%; in January, they’re 4.4%. We have a very good supply of move-in ready homes, promoting rate buy-downs but they’re typically used. We don’t use any forwards but about 86% of our orders are using some sort of financing incentive, most of it is permanent versus temporary. Another factor in our backlog at TPC, our average mortgage rate was 6.3% with using 2.1 percentage points and the — that’s our lock backlog. And in the Q4, TPC deliveries it’s 6.6%. So the beauty of higher rates is the homebuilders have the ability to pull a lot of levers to keep absorption. We had another excellent week of sales last week. So there’s this continued locked-in effect with the resale market that continues to allow the new homebuilders to increase market share of total home sales, I think it’s well over 30% now which is typically 10% and my own personal forecast, I think rates are going to stay pretty much where they are, maybe trend up a little but it’s an election year.
