Bill W. Wheat: Joe, the charge — the amount of the charge was $65 million approximately, and that’s basically what hit during the quarter. In terms of our position, outstanding. We believe that our position is — reflects the current market and the valuation adjustment in the December quarter takes care of all of it. There’s always some sensitivity. We always have some hedging position outstanding. And so anytime there is a significant sudden change in rates that can leave some exposure there obviously, the opposite side of that is the benefits to the business. When rates drop, obviously, that improves affordability and improves our ability to sell at a price point in the core business. And so what this hedging position allows us to do is offer below market rates on a consistent basis on a broad basis across our business.
And like we said, we try to manage that as best as we can, but in a period of significant sudden volatility, there can be some exposure to the position.
Michael J. Murray: There were two very significant moves in interest rates in the quarter. They went up significantly in the middle of the quarter, and they came down significantly to the end of the quarter. Kind of a very unique dynamic that we have not experienced. That’s what led to the mark-to-market adjustment being more severe than it’s been in prior quarters.
Jessica Hansen: And that $65 million mark-to-market is in cost of goods sold, whereas the just standard routine interest rate offering does net against revenue and flows through our ASP. But the $65 million specifically is in cost of goods.
Joseph Ahlersmeyer: That’s all very helpful, thanks for the transparency there. As a follow-up, thinking about the outlook for materials either inflation or deflation can you just speak to what’s in your 2Q guide and then maybe just generally, if we’re looking at starts rising and your volumes obviously growing, how should we think about the competition for materials perhaps driving inflation again in those?
Paul J. Romanowski: Yes, we’re seeing some relative flatness in our cost side of the business and would expect to see similar all things stay consistent through the next quarter. Certainly, with the encouraging signs early in to January, it’s possible that we see some increase in starts from all of our peers. That could put pressure on labor and on materials, which could cause some headwinds or some increase in the cost side.
Joseph Ahlersmeyer: Alright, thanks everybody. Good luck.
Operator: Your next question for today is coming from Michael Rehaut with J.P. Morgan.
Michael Rehaut: Hi, thanks for taking my questions. Good morning everyone. I wanted just to circle back for a moment on SG&A and I think, Bill, you talked about the main drivers of the higher or negative leverage, I guess, you could say, being community count and the stock comp. You’re going to see a similar type of negative leverage impact on the second quarter. Would you expect that to kind of flatten out everything else equal seems to imply you said that maybe in the first couple of quarters, you’re going to see this impact and that should kind of run through by the time you get to the back half or is this more of a 2025 event? And as part of this question, I’m also curious if higher sales incentives outside broker commissions has impacted this at all or if you could remind us if that’s the portion that’s in the COGS?
Bill W. Wheat: Yes, the last part first. Yes, our broker commissions are in and our gross margins are in our cost of goods sold. So that’s not part of the equation. And I think your general commentary there is fair. We only provide specific SG&A guidance one quarter out. But generally, our expectation over the longer term is that we would get back to a similar SG&A level as last year and beyond. So I think it is a phenomenon here for a couple of quarters where we’re guiding a little bit higher than last year.
Michael J. Murray: Little headwind on the community count market growth, but a little tailwind in Q2 on the equity comp position recognizing that in Q1 versus Q2.
Bill W. Wheat: And we’re also — also ASP is down year-over-year. And so it’s always a little bit more of a headwind on a percentage basis for SG&A when ASPs are down.
Michael Rehaut: Right. No, that’s fair. That makes sense as well. I appreciate that. Secondly, not to beat a dead horse, but I do — you kind of made a comment on the gross margins, Bill, and I don’t know if you misspoke or it would kind of make sense to us if indeed you did not misspeak. But I think you said at one point, we would expect gross margins to get back to the 1Q levels excluding the hedging impact, that would kind of make sense to us to the extent that in the last couple of months, rates have come down and your current orders would include less expensive rate buy downs than, let’s say, a couple of months ago. And I think you were kind of saying 2Q is currently being impacted by some of the carryover from 1Q. I just wanted to make sure I heard that right or how to think about where gross margins are today on orders taken in mid-January, let’s say, versus a couple of months ago?
Bill W. Wheat: Yes. We provided guidance one quarter out so we’ve guided to 22.6% to 23.1%. So essentially straddling the GAAP margin that we reported in Q1. Coming into Q2, the closings that we will have early in the quarter are at the — probably the low end of that range, maybe even a little below that. But then later in the quarter, margins are improving because of the cost of buy downs after rates have dropped is lower. And so — but on average, that’s — we believe that, that will balance out to a margin in the 22.6% to 23.1% range. What will occur after that we can’t really comment. It’s really going to be a matter of what’s the strength of the Spring selling season, what does demand look like through the Spring and what happens with mortgage rates. And so — but on average, that’s where we believe things will fall for margins in Q2.
Michael Rehaut: Right. So basically, what you’re saying is beginning of the quarter at the low end, perhaps a little bit below the low end of that range, that would imply towards the end of the quarter at the higher end or perhaps a little bit above the high end of that range, is that fair?
