We’re putting in some personnel resources where we need it. Rob talked a bit about some of the operational assignments and promotions and positions that we have in the business as we’re expanding the size of our divisions and the focus on growth and returns and we just feel that, scaling up this company will do some really good things for profitability, capital efficiency and returns. And we’re really well positioned at that point in time, having just a rock-solid balance sheet and fixing a lot of the issues that we’re nagging for many, many years and we’re well beyond those at this point. So, we’re just looking forward to growing this company and growing the returns as we move forward.
Operator: And the next question comes from the line of Michael Rehaut with JPMorgan. Please proceed with your question.
Unidentified Analyst: Hi, everyone. This is Andrew [ph] on for Mike. I appreciate you taking my question. I guess just more on the longer term side, should we be expecting any kind of change to your mix going forward as you grow? I believe in 4Q, your closings, your mix was roughly 50% entry level, 25% move up and the rest being active adult and second-time move up.
Jeff Mezger: Yeah. I think the market will dictate that more than we will. And I say that because when you’re a bill-to-order company and you’re focused on the median incomes in the sub-market that you’re operating in, you cater to everybody. And you have a product out there where it may shift to more move up and be the lesser footages, lower price points or it can shift to the first move up in the larger home and the bigger, higher income in the second move up. But the market will dictate that to a degree. Our strategy and our positioning is not going to change. So I would say it’s realistic, I guess, to assume we’ll be 45% to 60% first time and the other buyer components may move around a little bit. We’ve been around 15% active adult for years and years.
It’s a natural attraction due to the climate zones that we operate in and a lot of retirees come in and like our product as well. So we don’t target a specific buyer profile. We target an income and a price point and then let the buyers come and when you’re at the meet of the market, it will move around a little bit like it does. But it should stay in the same range we’re seeing.
Unidentified Analyst: Thanks for that. I’ll pass it on.
Operator: And the next question comes in the line of Susan McCleary from Goldman Sachs. Please proceed with your question.
Susan McCleary: Thank you. Good afternoon, everyone. My first question is thinking about the potential for lower rates and maybe an increase in activity on the ground in general. If we do see that as we move through the year, how do you think about the ability to retain the improvements that you’ve seen in the build times and the cycle times and to retain the labor force and to keep things moving at the rate that they have been more recently?
Rob McGibney: I think the opportunity there, Susan, is to continue to capture some build times. And as you look back over the labor shortages and the supply chain disruptions that we dealt with, I would say that, on either side that — those companies learned a lot and addressed it and fixed it, whether it’s hiring more people or fixing some of the glitches in the supply chain, whether national or international, even. And those are all healing, if not healed. And I think we can still pick up some build time compression and I think we can control costs, and in part because we’re going to even greater scale in the markets we operate in where we have relationships, in some cases, 40 years old with a contractor base. So, we see if the interest rates do come down and the markets warm up a little bit, it would be a tailwind force. We don’t think it’ll create build time issues and cost pressure.
Susan McCleary: Okay. Okay. So that’s helpful. And then maybe just turning to capital allocation, can you talk a little bit about how you’re thinking of that? You’ve been continuing to buy back some of the stock, which is nice to see. Is there anything there that’s changed or incremental in how we should be thinking about it?
Jeff Kaminski: Well, I can tell you, Susan, based on the prepared comments I made, we’re going to keep reversing shares at least the next 113 million that’s authorized. So that’s the first time we’ve signaled an intent. We’ve been active in share reverses for three years now, pretty consistently and it’s been a big boost both to our book value per share and our EPS and it helps your ROE along the way. And in part it’s because of all the cash we’ve generated. We’re still sitting on a large cash balance with nothing out on our resolver and we think we have the ability to invest in growth and continue to toggle and get more cash back to shareholders. So we think we can do both through 2024. I don’t see anything else you want to.
Jeff Mezger: No. I think that summarizes it. The focus — years ago, I mean, we had a focus on the balance sheet from the point of view of paying off some debt and realigning the leverage ratio that’s certainly behind us at this point and it’s full speed ahead with growth, improving returns, increasing scale and returning cash to shareholders is a key component for the capital allocation strategy.
Operator: And the next question comes from the line of Rafe Jadrosich from Bank of America. Please proceed with your question.
Rafe Jadrosich: Great. Thank you. Thanks for taking my question. Can you talk about the level of inflation you’re seeing today, maybe on a cash basis in terms of land and development costs as well as materials?
Jeff Mezger: Rob, do you want to take that?
