Bill Wheat: Sure, Steve. On our cash flow guide, we have been guiding to homebuilding cash flow because that has been the primary generator of cash for us over the last couple of years. And we have invested portions of that into the rental operation as well, which feeds to the consolidated cash flow from ops. So there is some offset versus the homebuilding cash flow this year. We’re guiding to around $3 billion of homebuilding cash flow. I would expect in the $800 million to $1 billion range, probably offsets that for the full year this year on consolidated. But we do expect that gap to start narrowing in future years as the growth ramp of our rental platform starts to moderate. And so we would expect going forward, our consolidated cash flow and our homebuilding cash flow to be much nearer to the same number beyond fiscal ’24.
So with the rental platform asset growth moderating, we’re at 3.1 today. We do still expect to see that grow a bit further this year and will grow slightly next year, primarily from the multi-family platform. Our multi-family platform continues to grow and we’re building out a more elevated level of starts over the last couple of years. But that will probably late ’25 start to moderate as well. And so we do see prospects for the cash flow on a consolidated basis to be increasing consistently from here into ’24 and into ’25.
Stephen Kim: Okay. That’s helpful. Appreciate that. And then with respect to uses of cash, I think as always, you talk about the opportunity for growth and your market share across the country, it still leaves some room there. And so I wanted to ask about your community count. You were up 4% month-to-month, up 15% year-over-year. That’s an area where a lot of other builders have struggled. And I’m curious if you can provide a little bit of granularity into how much you expect there is further opportunity for growth this year in your community count and what you generally target for the next year or two in terms of community count growth.
Jessica Hansen: Sure, Steve. We’ve been up a double-digit percentage on a year-over-year basis for community count now for several quarters. So we’ve probably got at least another quarter or so until we’ve cycled and anniversaried that and would expect the growth to moderate a bit. But as we look at our overall lot position and our positioning for the future to continue to drive growth, we have shifted to a lot of that coming from community count rather than just continuing to have to drive more absorption out of each and every community. So I do think you’ll continue to see our community count grow. It just probably won’t continue to be at the double-digit percentage year-over-year increase here in a quarter or two.
Stephen Kim: Okay. Got you. So like more like kind of like a high single-digit kind of rate is what you’re talking about, right?
Jessica Hansen: Yes, mid to high.
Stephen Kim: Okay, got you. Appreciate it. Thanks very much, guys.
Paul Romanowski: Thank you. Stephen.
Operator: Thank you. Your next question is coming from Matthew Bouley from Barclays. Matthew, your line is live. Please go ahead.
Matthew Bouley: Good morning, everyone. Thank you for taking the questions. I wanted to ask around start pace going forward. Perhaps we — assuming we live in this kind of mid to high sevens mortgage rate environment. Is there a scenario where you would dial back production at all to the extent it supports price or margin or maybe said another way, is there a mortgage rate at which you would consider pulling back a little bit on starts? Thank you.
Paul Romanowski: I think we’re going to manage the starts space at a community-by-community level based upon what we’re seeing with buyers in the market and how they’re responding to the current interest rate environment and mix of incentives that we’re offering. Traditionally, we’ve had a limiter for the past several periods on lot supply in terms of what we could actually start. So as we’re seeing our lots get developed and get brought online, we’re able to bring good production starts into the market. I think we started just under 25,000 homes in the quarter. And we probably expect that to continue into the June quarter as if we see continued absorptions and sales.
Jessica Hansen: And so with our gross margin currently over 23% and very solid, it would take a pretty big disruption in the market for you to see us have a broad-based across the board pullback in starts. As Mike alluded to, it’s going to be just driven on a community-by-community basis like it always is based on our finished lot position and what makes the most sense to maximize returns at that individual community level. So as we see right now, without another big shock or any sort of big shock to the system or a more significant move in rates, I think we would expect our starts to be pretty consistent through the remainder of the year.
Matthew Bouley: Got it. Very helpful. Secondly, I wanted to ask around credit and DTI metrics, particularly for your first time buyers. Are you seeing any sort of incremental signs of stress in your mortgage applications just given this affordability backdrop? Thank you.
Paul Romanowski: No, we’ve seen a pretty, pretty solid level of qualified buyer. Our average FICO store this last quarter was still at 725. And with the low level of inventory and available homes to purchase out there, you know, we still see strong buyer demographic and demand and we’ve remained pretty consistent. We have seen fluctuation in rates, but they’ve really not been significant enough to have any meaningful impact on our backlog and people’s ability to qualify.
Matthew Bouley: Great. Thanks, everyone.
Jessica Hansen: Thanks, Matt.
Operator: Thank you. Your next question is coming from Michael Rehaut from JPMorgan. Michael, your line is live. Please go ahead.
