Mike Rehaut: Thanks. Good morning, everyone, or just about this afternoon. I appreciate all the detail and color as always. Two questions. First, a little bit more obviously on the – on this proposed land spend. And I just want to make sure I’m thinking about it correctly because initially, I think to Steve’s prior question, it kind of hit on different areas of your current land program or prior iterations of how you’re thinking about moving different assets on or off the balance sheet. So it kind of sounds like this might be more of a – when you talk about a spin and a new or separate vehicle, my mind is kind of moving a little bit towards the four-star type of relationship of that they have with D.R. Horton. And the fact that there’s a lot of land that is on the Forestar entity that is – has a lot of rights of first refusal, et cetera, to Horton.
As opposed to something that I thought was more of the direction when you started talking about this, which was kind of more moving land towards your existing land banking or land bankers relationships, primarily thinking about the large facility that you have with Angelo Gordon. So just want to make sure that I’m thinking about it correctly in terms of it being more the former than the latter. And in thinking about that $4 billion number, I mean, right now in your press release, you have about $4.5 billion of – or $4.7 billion of land and land under development. So $4 billion would be a huge number, huge percentage of that amount. I just want to make sure that I’m understanding that that $4 billion is coming out of that bucket, and that would in effect represent over 80% of your lots owned that are on your balance sheet today.
Stuart Miller: So, Mike, I recognize your thirst for more detail, and we’ll give you more detail as we refine our program. And I wouldn’t be thinking about it through the lens of Forestar. We’re probably not going to go in that direction. But we recognize that you would like to know more, and we’ll give you greater detail as we refine the program.
Diane Bessette: Mike, the other thing I would add, because you might have been alluding to it, is that this will be structured. So there won’t be any consolidation on our balance sheet. It would be true – a true spin of land that’s in a separate entity. So we wouldn’t have any of those complexities of consolidation.
Mike Rehaut: Okay. So – but just on that point, if you’re talking about a $4 billion type of number, it would appear that that represents the – again, over 80% of the land and land under development. So we’re talking about, in effect, the majority of your land holdings. Is that the right way to think about it?
Stuart Miller: We have been moving to a land light strategy. That would be correct.
Mike Rehaut: Okay. Secondly, on the gross margin front, was asked earlier about back half of the year? And it seems like to get to the guidance of roughly flat year-over-year for the full-year you’re looking at back half gross margins of roughly 24% on average. We talked about maybe the mortgage market being perhaps less potentially a downward slope throughout the year than was initially anticipated. What is necessary to hit that 24% in the back half? Is it kind of already, I would assume on the books from a land cost basis, construction cost basis. Or are there – do you need to have less costly incentives or better pricing? Because at this point to the extent that that doesn’t come through, it seemed like the only way to hit that 24% if it was much more of just a mix and what’s coming through the pipe, so to speak.
Stuart Miller: So as we’ve detailed, our focus and programming has been really carefully crafted by design to focus on using our production programs to bring down costs and to use our machine to focus on right pricing, whether it’s price increases as the market gives them or whether it’s the very carefully crafted use of incentives. So the first thing is post reconciliations together with copper price, we feel comfortable that we’re going to be able to migrate in that direction. The second part of it is leverage. As we go through the year we’re generally producing and delivering more homes. So there are some embedded leverage in that and so there are a lot of moving parts that make up our view of where our margin is likely to go.
Of course, market conditions can change. They can change to the positive and to the negative. And we’ve been very clear that that margin is somewhat of a springboard for maintaining the volume that we expect to maintain. So there will be elements of the economic environment that factor into it as well. Can I detail specifically what the relationships are in those numbers? I don’t think so right now but it’s a combination of all of those pieces that will drive our margins to where we expect them to be for the year. We do have some visibility in some of the sales that have come through, and we continue to have confidence that we’re going to be able to get to that number – to those numbers by the end of the year.
Jon Jaffe: And I think as we said earlier, some interest rates stay relatively flat with where they are. We think we can continue to improve our operational view of how to increase margins in that same interest rate environment.
Mike Rehaut: Great. Thanks so much.
Jon Jaffe: Okay. You bet.
Operator: Thank you. The next question comes from Kenneth Zener with Seaport Research Partners. Your line is open.
Kenneth Zener: Good morning everybody or afternoon now. Want to start kind of high level here to understand or for you to clarify perhaps even flow, where starts lead orders, which is less cyclical. So first high-level question, what is your start capacity based on kind of your land partners, right? There’s some type of guardrails we have there and one of the big focuses of the industry are you going to grow or return in general? And on the land spin, why are you guys choosing to introduce this vehicle versus building out the homes or see knowing it as you have been doing back already, I guess.?
