Alan Ratner: Excellent detail. Thank you for the time as always. Appreciate it.
Allan Merrill: Thanks, Alan.
Operator: Next, we’ll go to the line of Alex Rygiel from B. Riley. Please go ahead.
Alex Rygiel: Thank you and good evening, gentlemen, very nice quarter. Your ASPs have been trending right around this 510 level. I appreciate the thoughts about the first quarter. But as we look beyond that, is there any thoughts or commentary that you can add to directionally where that ASP could go a little bit further out based upon the new communities that you’re bringing on and whether or not there could be a mix shift there?
David Goldberg: Alex, it’s Dave. I don’t really want to go beyond 2024 and the kind of initial conversation that we’ve had on that. But I remind you, in the prepared remarks, we talked about kind of a full-year ASP. And frankly, that’s down from where it is right now, around $500,000. Really, a lot of that is kind of choices we’re making, right? It’s what we’re offering, it’s community choice, it’s product choice. It’s included features. So it’s not saying assumption as you would imagine, on price declines or lower prices, but rather choices we’re making to address affordability and still keep value high for the buyer.
Alex Rygiel: That’s very helpful. And then you talked about in the past some certain geographies that maybe you had an interest in accelerating growth in I think Florida might have been one of the states. Can you give us a little bit of an update there?
Allan Merrill: Sure. First of all, we love our footprint. We can grow in every single market that we’re in. I don’t think people love it when I say dumb taxes, but I say it anyway. We paid them in a number of places. And so now it’s the point to benefit from the learnings that we’ve had along the way. And there’s no question. We want to be where the jobs are. Jobs are in Florida, jobs are in Atlanta, jobs are in the Carolina’s, jobs are in Nashville, jobs are in Indie. I mean, those are places that we see great growth opportunities. And then, of course, the West has been very good to us. Phoenix is obviously a little bit more challenging. It’s a tough land market. There are water issues. I don’t think that’s going to be a big growth engine. I do think our business will become a bit bigger there. But I think the larger amount of growth for us is going to be in Texas, our recently acquired San Antonio business will play a big role in that, Florida, up the East Coast.
Alex Rygiel: Very helpful. Thank you very much.
David Goldberg: Thanks, Alex.
Operator: Thank you. [Operator Instructions] And currently, our last question in queue is from Jay McCanless from Wedbush. Please go ahead.
Jay McCanless: Hey, guys. Thanks for taking the question. So when I look at the fiscal ’24 guidance on page 14, it looks like the adjusted gross margin range, all are thinking it’s going to be down anywhere from 50 to 110 basis points versus what you put up in fiscal ’23. I guess, could you talk about, one, what type of mortgage rate assumptions are built into that? And then maybe two, is that a function of some of the discounting and price cuts that we’re seeing from some of your competitors right now?
Allan Merrill: So a few things going on there, Jay, and I think Dave and I both have things to say. The first thing is it assumes — and Dave’s comments made this point, we assume that rates are roughly in the range where they are now, call it, 0.25% point, 0.38% of a point either way. We don’t assume that they’re following. We don’t assume that they’re going to be sustainably over 8%. So that’s kind of the framing for how we thought about our full-year guidance. If you think about the margin, it’s actually got less to do with discounting and it has more to do with mix shift. I think either Dave or I said in our comments, we opened 60 communities in 2023. We’re going to open a bunch of communities in ’24. So the mix of communities that we have generating closings in ’24 is going to be tilted to a very young vintage.
And it’s been our experience, and I think you can channel check this across the industry. You’re typically not getting your highest gross margins out of the community in the first three, six, nine months. So I think that’s a significant factor in the margin guide. It does reflect a little bit of the increase that we’ve had since June in the financing cost, but it’s not like we’ve leaned into that and assume that, that gets worse. It’s more kind of a normal or — normalized at the current level of mortgage rate and it’s a mix issue are really driven by that mix of new communities. And I have to say, I’m really excited to have a bunch of new communities that were tied up, renegotiated, brought to the market in a much different interest rate environment than when they were originally envisioned, able to generate margins that are above our 10-year average.
Like that’s a pretty good place to be.
James McCanless: Absolutely. I guess the second question I had, the homes that you’re selling now that will need to get finished or even just a straight up to be built. I guess what’s the range of delivery times that you’re giving out now? And I know you said cycle times are down two months in the fourth quarter, I guess, from what you’re selling now, where do those cycle times compared to where they were pre-COVID?
