Stephen Kim: Great. Thanks very much, guys.
Operator: Your next question is coming from Carl Reichardt with BTIG.
Carl Reichardt: Good morning, everybody. I want to talk about SG&A for a second. Bill, can you talk about the basis points associated with the incentive comp this quarter? And then you talked about it being also ahead of some growth you’re planning. Can you talk a little bit about community count expansion and whether or not this also might be related to some of the new markets you’ve entered more recently? Thanks.
Bill W. Wheat: Sure. Yes. The first factor this quarter, we could point to our 14% increase in our average selling community. So that’s obviously a significant increase, and our SG&A is up 14% this quarter year-over-year as well. So that’s a bigger move than we have had in a while that’s positioning us to be able to provide the increased guidance, and you have seen our market count increase over the last several years. Obviously, we expect in time to achieve some leverage on that. And as we grow our revenues, we would expect our SG&A to come back down to historic levels. But I think we’ve got a couple of quarters here where we’re going to see our SG&A little bit higher as a percentage of revenues, primarily driven by that. This quarter, we have one additional factor and really, it’s just a timing factor in terms of the impact of equity and stock-based comp.
We typically have an amount that we incurred typically in our second quarter or third quarter, but the timing of some grants this year were a little bit earlier into our first quarter. And so there’s an amount of roughly $13 million that it was incurred in Q1 of this quarter that typically would be a Q2 or Q3 event.
Carl Reichardt: Okay. That’s small. So it’s different this year. Okay, thank you for that. And then I have a bigger picture question for Paul. So obviously, the biggest news that we’ve seen in the business for a while is a large acquisition by an offshore player of a domestic homebuilder. And historically, long ago, Horton was a fairly significant acquirer of public companies and other private companies and still here and there. We’ve seen you look at some deals. Paul, can you talk a little bit about from your perspective, what do you think — whether or not acquisitions are something that Horton would consider historically, I know you’ve done it more recently, you’ve talked about doing most of your growth greenfield. I’d just like to know, given current conditions where you sit on this sort of big picture? Thanks so much.
Paul J. Romanowski: Yes, Carl. We still today look at — continually look at acquisitions. And for us, we’re more interested in the smaller tuck-in builders that may add to our market share in an existing market or give us some entry, but we do always have that opportunity to greenfield those. I don’t see on the horizon, a significant large acquisition. Certainly, the acquisition that you’re referring to make some sense. We speak to scale a lot in market share, and that makes some sense to us. But today, we’re going to continue to look at those as they come available, but no significant shift in what you’ve seen us do over the last couple of years.
Carl Reichardt: Appreciate it, thanks Paul.
Operator: Your next question for today is coming from John Lovallo with UBS.
John Lovallo: Good morning guys, thank you for taking my questions as well. The first one here is it seems like the first quarter gross margin at least relative to your expectations was impacted by that 100 basis points of hedging that seemingly was not contemplated in the initial guide. So I guess the question is, why would the 2Q gross margin be flattish sequentially if that hit is not expected to repeat and rates have come in a bit?
Bill W. Wheat: Well, it starts with — we sold homes with an increased level of incentives while rates were higher during Q1, and some of those closed in December, but there are still a number of them that will be closing in Q2. And so far on a core basis, we still are entering the quarter a little bit lower margin than what the average presents. And so that’s — but obviously, rates have dropped, and so those incentive costs are a bit lower in the later sales. And so on balance, we expect we should be able to hold margins around the current levels, excluding the hedging going forward.
John Lovallo: Okay, got it. And then I think last quarter, lot costs were up 10% or 11% year-over-year, but I think there’s some geographic mix that was in there and maybe it normalized to up sort of mid-single digits if you kind of accounted for that mix. I mean, how did lot cost trend in the quarter and how are you thinking about that in 2Q?
Jessica Hansen: Pretty similar to what we said last quarter. That was a year-over-year comp. And so we still were up low double digits on a year-over-year basis, and it did continue to have a little bit of geographic mix. But I would say, stripping out geography, our lot cost on a year-over-year basis probably are up high single digit. And until we cycle an entire year, it probably stays that way, and then it would moderate in terms of year-over-year because it’s certainly less than that on a sequential basis.
Bill W. Wheat: Yes. 1.5% on a sequential basis.
John Lovallo: Got it, thank you guys.
Operator: Your next question is coming from Joe Ahlersmeyer with Deutsche Bank.
Joseph Ahlersmeyer: Hey, good morning everybody. If you are to humor me for maybe a couple more on the gross margin, could you just talk about the actual P&L impact of that charge, whether it was something that hit deductions from revenue or if it was just a hit to COGS? And then similarly, on the — what you’re expecting going forward, I guess it makes sense, you’re not expecting it given rates has kind of stabilized but is there a way to think about the sensitivity based on what you’ve still got out there notionally, like if we had another 50 to 100 basis point drop, would you have another 100 basis point impact from here?
