Kenneth Zener: Good. And if I could ask, I guess, more — another question. If it goes to the balance sheet, and you guys self-develop lands. I think your statement around impairments backs why you do that up a lot. And I’m just trying to [indiscernible] your balance sheet. So one of the ways I think about that is your units in inventory at about 3,500 or 3,427, where do you think — if you can help us understand your kind of thinking process, like where do you think that would be? Because I mean that was as high as 4,800 in 2Q ’22. And I’m asking relative to your own lot count, which is like 8-year supply right now, but you ran out of land, so your pace came down. Do you think your own lots are going to be basically the same and you’re just picking up your closing pace.
So your owned lot supply will go down. And I asked about the units under construction because that’s obviously another part on your balance sheet. If you could address that in terms of where you think that might be at the end of the year?
Charles Merdian: Yes, sure. Ken, I can take this one as well to start with. So out of our $3.1 billion in inventory, about $2.1 million of it is invested in raw land, land under development and finished lots. So really, when you break down the owned lots, we do that in the prepared remarks, breaking the 55,000 lots down, 41,155 of them are in either a raw stage or under development. So that would include either truly raw, still the corn field, future sections, that type of status. Or in engineering, which is a low-cost investment way to be ready for future active development. So only 25% or roughly about 10,000 of our owned lots are under development. So we think we are in good shape in terms of managing the delivery of those lots to be able to satisfy the expected demand in terms of what we think for not just 2024, but going into 2025 and bring the engineered lots into active development so that we can pace that accordingly with what we think our closing results are going to be for the next couple of years.
And then shifting over to vertical, we manage to about 6 months’ worth of inventory. So just over 3,400 units on our — from an implied midpoint or low point of our guidance would be just shy of 6 months. So a slower start to the year that Eric mentioned that pace is expected to increase in terms of the start pace as we introduce new communities later on throughout the year. But the way we think about it, the $800 million we have invested in vertical represents a 6-month supply of where we think closings are going.
Operator: And our next question will be coming from Michael Rehaut of JPMorgan.
Michael Rehaut: First, I wanted to kind of just dial in a little bit on the closings and the pace of community openings in ’24. Eric, in your — you have the guidance out there of a growth rate range of 4% to 19%. And Eric, I don’t know if it was intentional or not or you’re just referring to the midpoint, but you kind of described your outlook for community — I’m sorry, closings growth this year is double digit. So I don’t know if that was just referring to the midpoint or your, maybe, higher conviction of kind of hitting the upper half of that range. I don’t know if that’s kind of one way to look into that. But I wanted to get a sense for your level of conviction, let’s say, of hitting the upper half, if indeed, you really do expect kind of to hit that, let’s say, 7,500 to 8,000 range, let’s say. And how does the community count openings? You said it was back half weighted. How should we think about that getting to 150? Like where would we be, let’s say, midyear?
Eric Lipar: Yes, great question, Michael. I appreciate you asking it. A couple of comments. First of all, I think we agree with you. We hope closings — our closing guidance is conservative. And that’s the way we believe it always should be. So yes, when we’re talking about double-digit growth, that was referring to the midpoint. Community count growth, we do expect to be back-end loaded. As an example, one of the exciting things that the team is gearing up for here is we’ve got 18 new community sales openings in the month of March. And we would expect all 18 of those to be active communities in Q2 of this year, and then adding in Q3 and Q4. So February community count is probably going to be similar to January community count.
So really ramping up throughout the rest of the year, primarily in the back half. So those are a couple of exciting things. And yes, we’re — if we perform the way we’re supposed to, leads are up, sales last week were really positive, midpoint to high end of the guidance range is certainly possible, and that’s the goal.
Michael Rehaut: Great. Great. And then on the community count, I think previously, you had talked about getting to above 180 by the end of ’25. Is that still kind of the goal there? Or, I know that in an earlier question, you just said growth, but I think you’ve been more explicit in other calls and kind of looking at getting to that 180 mark or better?
