Bob Schottenstein: But every community, we don’t have 1,000 stores. If we did, it might be a lot harder. We’ve got 220 or so stores and across 17 markets, there’s a very intense subdivision focus. If the margins can be 25.5% instead of 25%, they need to be and we try to monitor that as needed weekly.
Phil Creek: And I know I keep coming back, Jay, to the new stores, but you only get a chance to open once. And you open a couple of lots, you sell a couple houses, then you kind of reassess where you are. Again, don’t get too far ahead of yourselves. When you look at margins the last four quarters, we were 25.5% in the second quarter of 2023. We were 26.9% in the third quarter of 2023. Then we were down to 25.1% and now 27.1%. So mix has always impacted. We have some divisions that have higher margins than others for different reasons. So there’s always some mix and some product and where you’re opening new stores. But, again, we have a big focus, always have, on gross margin. It means so much to us.
Bob Schottenstein: The other side of it is, we’re really, really — because not all builders account for gross margins the same way. There’s nothing that you or I can do about that. But the — we’re very focused on our pre-tax percentage, 17.2% for the quarter. One of the best we’ve ever seen. Very pleased with that. You can’t get to 17% if you don’t manage the gross margin line properly.
Jay McCanless: Gotcha. Two more from me and I’ll pass it on. Bob, I think, you made a comment earlier about new communities performing better than expected thus far in 2024. Is that the case for both the northern and southern regions?
Bob Schottenstein: I think it is, but I’m going to defer to Phil. I think he’s got some of that in front of him right now.
Phil Creek: Yeah. Yeah. I mean, if you look at it, at the end of the year we had 102 in the northern. Now we have 101. We had 111 in the southern region at the end of 2023. Now we have 118. So, yeah, there’s a few more new openings there. Again, Fort Myers and Nashville are in the southern region where we’re opening stores, new markets and stuff, but…
Bob Schottenstein: Yeah. But, overall, we’re pleased with all the new stores, with the way they’re opening and what they’re performing at, Jay.
Jay McCanless: Okay. And then last one for me. Stock repurchase, how are you feeling about that for the year and should we expect some level ongoing stock repurchase on a quarterly basis going forward?
Phil Creek: Jay, that’s something we look at constantly. We’ll be discussing it again with our Board at our May quarterly meeting. The last few quarters we’ve been at that $25 million repurchase level. We do think it’s important to have a consistent type program. We’re low leverage people in general. Having $800 million in cash is a little more than we thought we would have. So, again, we’ll continue looking at that. We are spending more on land and will spend more on land than we did last year with more of that spend being in land development. We think we’re in great shape from a land standpoint, as Bob said, to continue growing the business. But we will continue looking at that and we’ll be discussing possibly increasing that level.
Jay McCanless: Okay. And then just since you brought it up, Phil, maybe talk about what your land costs have gone up this year and what you’re kind of projecting or thinking going forward in terms of land cost inflation?
Phil Creek: Land costs continue to increase. There’s still competition for the better A locations, which we primarily focus on. We are spending more on land than last year and anticipate continuing to do that. Today we’re developing 80% to 85% of our own communities, which is a little higher than a year ago. So it’s not going up as much as it was, but raw land costs and land development costs continue to increase. But, again, I mean, your location, the product, price point you have, I mean, the locations are key to our business. So we continue to spend a whole lot of time on that.
Jay McCanless: Okay. Sounds great. Thanks for taking my question.
Bob Schottenstein: Thanks, Jay.
Phil Creek: Thanks, Jay.
Operator: And there are no further questions at this time. I will turn the call back over to Phil Creek for closing remarks.
Phil Creek: Thank you for joining us. Look forward to talking to you again next quarter.
Operator: Ladies and gentlemen, this concludes your conference call for today. We thank you for joining and you may now disconnect your lines. Thank you.
