Phillippe Lord: Yes. Everything is going as planned. It’s really just a timing thing. I think you’ll see that timing reverse out here in Q2 and Q3. But none of it indicates anything around our ability to go acquire the lots we need for 2026 and beyond. And we’re also finding deals for 2025. So it’s really all just timing.
Hilla Sferruzza: I’ll add one more point, Alan. This is a disclosure that comes out in the 10-Q. So you’ll see but I will just give you guys a sneak peak. You guys know that we have about – at the end of last year, we had about 28,000 lots that some level of due diligence was still ongoing, but were not counted in our actual lot totals because we hadn’t committed. That number has actually increased from 28,000 to 34,000 just in the quarter while we grew our community comp. So the ability to find land to pencil is definitely not the issue. It’s just timing of when deals were closing.
Alan Ratner: Great. That’s really helpful. Thanks a lot guys. Good luck.
Phillippe Lord: Thank you.
Operator: Thank you. Next question is coming from Michael Rehaut from JPMorgan. Your line is now live.
Michael Rehaut: Great. Thanks very much. Congrats on the results. So first question, just around gross margins. I would love to just get a sense, and I apologize if I kind of missed some of this earlier in the call. But just what drove the actual upside in the first quarter versus prior guidance? I think part of the review that was earlier was more just focused on year-over-year, but was more interested in kind of zeroing in the upside in the first quarter results versus your guidance and how that also flows through to the higher guidance for the full-year? And then also on the gross margins. I believe I heard correctly that you expect 2025 gross margins to, at minimum, be similar to 2024. And I just wanted to make sure that I heard that correctly as well?
Phillippe Lord: Yes. I’ll let Hilla take the second part. So as we came into Q1 and guided to our Q1. We didn’t have real visibility into the strength of spring selling season. So it was early into January. And obviously, the spring selling season has been very, very strong. So as you can see from our backlog conversion rate, we were able to convert a lot more move-in ready inventory than we had initially assumed. And the demand for that move-in ready inventory was really strong. So we were able to take pricing. And we didn’t need to use as much of the rate lock dollars we had in our assumptions to get people into those mortgages and those homes. We obviously had assumed that rate locks are still going to be heavily utilized coming into the year, and they were much less utilized.
So between backlog conversion and more leverage, ASP improvement and then less incentive utilization, obviously, we had a beat on our margin guide. And then I’ll let Hilla talk about the guidance for 2025.
Hilla Sferruzza: Yes. So we’re not providing guidance yet for 2025. We just wanted to clarify. We heard that there was maybe some confusion about the composition of our lot cost that’s flowing through the financials in 2024. If it was going to be a little bit of the noise from the higher land development cost in 2024 and some also coming in 2025. And we just wanted to clarify that pretty much everything that’s running through our financials these days is fully baked in at the higher land development spend. We don’t have any more pre-COVID land. So for us, the level of lot cost as a percentage of revenue that you’re seeing in our numbers in 2024, that’s the new run rate until land development costs come down. So there’s not another shoe to drop with another reduction to gross margin from land. We’ve not given guidance on any other component of gross margin to 2025, just quite yet.
Michael Rehaut: Okay. No. I appreciate that. And I guess maybe just also looking forward, you kind of talked consistently about an accelerated rate of growth in 2025 and beyond. You’re obviously looking for mid to high single digits this year. Without getting into too many details, I mean, my impression of higher growth would be something more in the low double-digit range at minimum. And I’m just curious if that’s the right way to think about that? Or could it even be something in the teens. I’m just trying to get a degree of magnitude when you talk about accelerated growth?
Phillippe Lord: Are you talking about for 2025?
Michael Rehaut: Correct. Yes.
Phillippe Lord: Yes. I mean, we’re obviously not prepared to give any guidance on 2025, but we’re buying a lot of land. And anything less than 10% isn’t really what we’re targeting either, but we’re just not prepared to guide to that at this point.
Michael Rehaut: Okay, fair enough. Appreciate it. Thank you.
Operator: Your next question is coming from John Lovallo from UBS. Your line is now live.
John Lovallo: Hey guys, thank you for taking my questions. The first one is not to get nitpicky, but if we look at the midpoint of the 2024 delivery outlook, it’s 14,750 homes. And if we back out the first quarter deliveries of 3,507 and then the second quarter midpoint, sorry, of 3,700, – it would imply sort of average deliveries in the third quarter and the fourth quarter of around 3,771. So I guess is the lack of sequential step-up in delivery more a function of the business becoming a bit more even flow from a production standpoint? Is it sort of a lack of available homes in the pipeline? Or is there something else that may be kind of leveling that growth off?
Hilla Sferruzza: Yes. So that’s a great point. I’m glad that you made it. Thanks, John. So I think we alluded to it a little bit, but maybe we’ll just put a fine point on it. I’ll start and Philippe can take us from there. When you’re selling and closing homes in the same period, the spring selling season results get pulled up. So before Q4 was kind of our huge quarter where what we were selling through May got delivered 2.5 quarters later because we’re now buying. But because now we’re selling and closing intra-quarter, you’re seeing that same fantastic value just come up earlier into the year. It’s still going to be a good Q4, but it’s not really reflecting the spring selling season homes anymore. I’ll let Phillippe take that’s well.
Phillippe Lord: Yes, that’s right. I mean, we expect that we will now see Q2 and Q3 being our biggest volume quarters with Q4 being a little more modest and then Q1, just depending on the spring selling season. So that’s going to be kind of the new cadence of our business, unlike what it was before where usually Q3 and Q4 were our biggest quarters.
