Anthony Pettinari: Okay. That’s very helpful. I’ll turn it over.
Operator: The next question comes from [Michael Emhoff] (ph) with JPMorgan. Please proceed.
Mike Rehaut: Hi, good afternoon. It’s Mike Rehaut. Thanks for taking my question. So, I wanted to discuss — maybe it’s a little kind of more difficult question to answer, but with the stock pullback today, just curious what type of feedback you’ve gotten for investors, if there’s been any kind of elements of surprise. I mean, relative to our estimates, your closings came in below what we were looking for, for the quarter deliveries, which would kind of make the back half — shift some of the delivery timing a little bit more to the back half. But similar to your own comments around confidence on the full year, it doesn’t seem like making those numbers is too much of a stretch per se. So, just kind of curious on the market reaction and if there’s any kind of elements of disappointment that you’ve been able to detect from the investor base.
Katie Smith: We were disappointed too by the reaction to the stock today. We thought it was a really good quarter. Net income was up 67%. Pre-tax income was at 64%. And revenues were at 11%. So, we were surprised to see the reaction. Our deliveries might have been a little light from what you had estimated, but we beat on EPS across the board. So, we don’t have any specific feedback that we’ve received from the investor community today, but we’d be very interested to hear what they’re thinking and why the stock traded the way that it did today.
Mark Walker: And based off a lot of deliveries in the first half of the year, if you look back at fiscal year ’22 and ’23 and now for fiscal year ’24, they’re all approximately lined up about 40% where we end the year. So, we’ve been stacked up against 60% of lot closings at the back half of the year. The positive is we closed 1,200 more units, approximately 1,200 more units this first half of the year versus the last half. So, we feel good.
Mike Rehaut: Right. No, understood. And I’m happy to share any feedback I get over the next couple days as well. But just a couple of smaller questions, if I could. I think in answer to one of the prior questions, you had kind of broken out that, excluding some items, this current quarter, the average sales price per lot was closer to $90,000 for the second quarter. Is that kind of a good number to use going forward for the back half?
Katie Smith: It’s kind of — I mean, it really just depends on which projects deliver in any given quarter, but our guidance implies ASP for the year of about $96,000.
Mike Rehaut: Right. Okay. And I guess just lastly, maybe more of a bigger picture question around the ability to sell lots to other builders outside of D.R. Horton. I mean, noticing that the percent of total owned lots connected to Horton remain around 60%, a little bit higher than perhaps a couple of quarters in 2023. We still have a fairly high percentage of lots sold to Horton. Appreciate any type of update around how you’re thinking about the next two or three years in terms of building out other builder relationships and how that might unfold.
Andy Oxley: So, we look at it, number one, to grow our footprint within Horton, and then number two, to grow our overall footprint. So, with the stated goal of trying to achieve one out of every three lots that is a Horton start requires phenomenal growth by Forestar. But then, as I mentioned earlier, where we look particularly in larger communities, where we can position a complementary builder in there to help absorb and monetize the asset, we have a lot of those conversations. But those bigger projects take a long time to bring to market. It takes a long time taking them through entitlement and then delivery of them. So that leads to some of the lumpiness on a quarter-by-quarter basis. But we do expect to grow our third-party builder business.
Katie Smith: Yeah. Mike, as we get closer to that 30% fulfillment of Horton’s needs that we’ve all talked about multiple times, once we get closer to that, I think that the third-party business will start to grow faster. We just want to make sure that our largest and best customer is well taken care of. But we do believe that ultimately up to 30% of our lots can be sold to other customers.
Mike Rehaut: Great. One last one if I could sneak one in or I can get back in queue. I don’t know if there’s others behind me.
Katie Smith: That’s okay. Go ahead.
Mike Rehaut: Just on the 26% growth in controlled lots in the quarter, it was a nice step up this quarter and predominantly through the option lot bucket. Just trying to think about the timing of how that might flow through. And in particular, I kind of have an eye on this question around lot growth — lot delivery growth for fiscal ’25. If that would help support, I think, a continued goal, correct me if I’m wrong, of at least double-digit volume growth going forward?
Mark Walker: Yeah. We’re continuing to manage our business market by market, project by project. So, we’re trying to deliver finished lots that price and pace that meets demand. I mean, back to land acquisition, that can vary just based off the project in terms of entitlement and timing. And so, across our landscape, the specific, it gets down to the division and that project and what their goals are to expand their business model, as Andy said earlier, just penetrating the markets that we’re currently within. I don’t know that we can actually put a timeframe on that, but a lot of it’s got to do after we acquire the lots or cycle times and getting those deliveries to market. So, we do put some cushion in there, but at the end of the day there’s no specific way based off market to market project by project of how we can put those in the queue to map those out.
