Ryan Marshall: Well, Alan, it’s going to be tricky, and I will break down a couple of components that we are looking at on the cost side. We’ve talked a lot about affordability being the biggest challenge that we’ve had over the last several quarters. And I think affordability is going to continue to be the theme as we move through kind of 2023, not just in housing, but I think in all consumer spending, consumers are feeling the affordability pinch, and it’s part of the reason that we’ve worked so hard to find prices that we believe help to address some of that affordability pinch. With that comes the cost side that you’re appropriately highlighting. We have certainly seen and we’ve gotten very positive reception from our trade partners around the front end of the house as they’ve started to see a slowdown in new starts and kind of permits pulled.
We’ve been collaborative in talking about what we’re seeing and hearing from consumers. And they really — they’ve worked to help reduce costs kind of as we’ve reduced our prices as well. We’ve seen a lot of progress with lumber. That’s certainly a commodity and those things can kind of change. So we’ll keep an eye on that. Probably the thing that I would tell you is going to be hardest on the cost side is the labor side of things. And that’s the piece that I think will be sticky. Those wage increases have been real, and I think once those wage increases have been provided or given, they’re hard to get back. Not impossible, but the material side — not saying the material side will be easy, but I think we will likely have more success or easier success on the material side than we will labor.
So time will tell as the year plays out. As I highlighted in some of my remarks, we’ve got some really aggressive goals that our procurement teams are working on to reduce overall costs.
Alan Ratner: Got it. Just if I could squeeze in one last one there. So on the lumber side, I just want to make sure I understand the timing of this. You mentioned that you’re benefiting now on 1Q deliveries from the pullback we saw last year. Assuming this 40% increase kind of holds here or maybe even goes a little bit higher, when would that eventually be a headwind to your margins? Would that be kind of a second half of this year type impact?
Bob O’Shaughnessy: Yes.
Alan Ratner: Thank you, Bob. Appreciate it.
Ryan Marshall: Efficient, very efficient answer.
Operator: Our next question comes from Michael Rehaut with JPMorgan.
Michael Rehaut: Thanks. Good morning, everyone.
Ryan Marshall: Hi, Mike.
Michael Rehaut: I wanted to circle back to the gross margins in the fourth quarter and the first quarter guide. And as Alan referenced, you’ve a significant gap positively in your favor, obviously relative to the rest of the industry at this point. And it’s interesting that, obviously, one or two quarters doesn’t make a trend, but when you look back in prior years, the historical gap of gross margins was in the 200 to 250 bps range, and now we are talking double that, if not more. I just wanted to make sure because I think it would be helpful for investors to kind of understand. If there isn’t any type of kind of short-term actions or things within the mix or relative to what you have in backlog that if there’s any reason that there’s some unusual short-term items that are helping the gross margins.
Because we all kind of remember the comments you made last quarter of not being margin proud, and you didn’t have a significantly lower order growth number than we were looking for, but just wanted to understand kind of some of the puts and takes there, and if you’re doing anything significantly different in the industry in the marketplace that might allow this larger gap to continue.
