Jeff Mezger: Well, it’s interesting, Susan, you’ve tracked us for a while, you know, the design center, it’s a great consumer laboratory every day for what the consumer values and what they choosing because they are voting with their checkbook and our studio revenue in the fourth quarter deliveries was actually the highest it has been in many years. Not by a big number, it’s tweaked up a couple of grand a unit from Q1 to Q4 but it cleared 40,000 a unit. And for the most part, it continues to be value type items. It’s not the seasonal items but it’s the value items, I need more cabinets, I need this converted to a den or an office, as opposed to a bedroom, I want a bigger covered patio because of the climate where this community is, it’s not giving a seventh level of granite, not the second level because I want nicer granite in my home. But the consumer is continuing to spend in the studio.
Susan Maklari: Okay. Thank you. And then the follow-up question is, thinking about the financing piece of it, I think that you said that the down payments on average are 17% and that you actually saw more cash buyers on a sequential basis in the quarter. Are you seeing that people are preferring to either use cash or just have bigger down payments as opposed to say using floating rate or other sort of alternatives?
Jeff Mezger: Well, I think it’s interesting that the down payment, our pricing has been moving up a little bit and the down payment percent has been moving up a little bit as ’22 unfolded. I think people like to put more down in order to avoid the mortgage insurance. And if you think about the conventional percentage, we had at 66% and then they put down that much, they can have a much lower mortgage insurance and it helps their — with their monthly out of pocket. I also mentioned that adjustable rate ticked up, which they did, but it was like from 1% to 6%. So the vast majority of buyers are still taking a fixed rate.
Operator: Thank you. And the last question we have time for comes from Jay McCanless from Wedbush. Please proceed with your question.
Jay McCanless: Hey, Good afternoon and thanks for taking my questions. Could you talk about what your spec count was at the end of the quarter and maybe some notion of where you want to run that in the first quarter?
Jeff Mezger: Well, Jay, I shared in the prepared comments, we’re, our WIP right now is about 80% sold and it’s at 8,800, so that’s roughly 1,700 inventory spread across various stages and that’s about where we’ve always run it historically. So depending on how our sales track and our built-to-order sales and our starts will try to target the 80, 20 going into Q2 and Q3 deliveries.
Jay McCanless: The other question I had, just thinking about the cadence of quarterly closings for ’23, with the orders being down so much this quarter, should we expect some type of gap out in 2Q or 3Q or is there enough homes in backlog to make up for that?
Jeff Mezger: Actually, Jay, I think what we’re falling back into a more normal seasonal cycle. We entered the year with a nice backlog that sets us up first half of the year and then the spring selling season will deliver out in second part of Q3 and in Q4, which is what we’ve typically done around here. Normally, a backlog of 7600 would be a much higher delivery count than we’re guiding to, because we still have to get our build times back but as Rob shared, we’re starting to see that compress.
Operator: And ladies and gentlemen, this does conclude today’s question and answer session. And this also concludes today’s teleconference. Thank you for your participation, you may now disconnect your lines. Have a great rest of the day.
