And so when Dave talks about development and using the feedback from customers on development, that’s a really big one for us and super excited about what the teams are coming up with. We got to see some pilot stuff recently or some demo stuff recently. I agree with Dave. You all are going to like it.
Kurt Yinger: All right. Good to hear. Well, appreciate the color and good luck here in Q4, guys.
Peter Jackson: Thanks, Kurt.
Operator: And our next question comes from Quinn Fredrickson with Baird.
Quinn Fredrickson: Hey. Good morning. Just curious on the fiscal 2024 scenarios in terms of the high end versus the low end. Is the swing factor there just really rates or anything else we should be thinking about there?
Peter Jackson: No question, affordability rates in particular are in focus for us in terms of trying to predict that starts number. It’s an interesting balance, though. We’ve continued to see very healthy, very stable, as Dave referred to sales and production through the industry. But that question of is there a magic number of mortgage rates that really puts a step down type of impact on this industry is in everybody’s minds. So far, no. But we’re certainly keeping a close eye on it and really what you’re seeing here, and I was trying to highlight it a little bit before, these are different ranges that we’ve seen from economists. We think this encompasses what we saw from all the economists that we were gathering in the last month or two. So, certainly, we’ll continue to dial this in. We’ll continue to update it based on what we’re seeing. But that’s kind of the context in which we came up with it.
Dave Rush: Yeah. The only thing I’d add is, keep in mind we’re talking the full year, right? We’re not sure if we might have some more macro headwinds in the beginning of the year and at ease as the year goes on. But who knows? And what we hear more often than not, though, is the back half would probably be slightly better than the front half in that scenario.
Peter Jackson: We’re ready regardless and I think that’s kind of our outline here with the scenarios is we’ve got a high performing business. We’re going to deliver really favorable positive numbers regardless of which way this goes. So, we didn’t want to hesitate to put this out there for people to contemplate because sometimes the skepticism or the fear in the marketplace can become a little more than what’s appropriate.
Quinn Fredrickson: Okay. Thank you. And then on the productivity side, is there a certain target baked into these scenarios or is it kind of the typical 3% to 5% kind of productivity savings that you talked about at the Investor Day? Thanks.
Peter Jackson: Yeah. So I’m glad you asked that question, because I do want to differentiate between a couple of things. First of all, the 3% to 5% is our goal internally. So please do not ever load that into your numbers, because I don’t want to steer you the wrong direction. In terms of what we’ve been able to do, it certainly gets harder, right? I mean, you talk about it being the first couple of years of being harvesting the low-hanging fruit. We have a tremendous opportunity to continue to deliver productivity savings, but I think those savings become a bit more challenging, a bit more programmatic over time. So I think a moderating of the annual number is appropriate, but we intend to continue to deliver on that over time and that will be an important part of our discussion in December as well.
Dave Rush: Well, what I can say definitively, it’s embedded in our culture now. I mean, we have everybody in the field at all points. We offer incentives for any employee to come up with an idea and submit it and if it’s an idea that we can use to cultivate savings from, we reward that employee for that idea. So, it is embedded in our culture. We have leaders from the field come together every year to set targets, set goals and try to identify initiatives that will be the primary focus. And what I’m proud about is our ability to consistently deliver savings each year.
Quinn Fredrickson: That’s helpful. Thank you.
Peter Jackson: Thank you.
Operator: And we have our next question from Mike Dahl with RBC Capital Markets.
Mike Dahl: Good morning. Thanks for taking my questions. Dave, Peter, I want to stick with multifamily and I guess kind of challenge the phrasing and framing of a pause that then is resolved by the end of next year. I think the industry participants we talked to are starting to talk about numbers that are significantly greater, declines of 30%, 40% and starts next year and no rebound and potentially even further declines in 2025. So what specifically are you embedding for multifamily and who are you talking to? Is this kind of high level economist like you’ve alluded to or industry participants in multifamily informing that view? That’s kind of part one. And part two has been maybe as a follow-up. Just remind us, how much of your business in multifamily is more tied to starts versus maybe mid to later in the construction cycle there?
Dave Rush: Well, the only thing, I guess, I want to clarify, Paul is, Paul’s being from a standpoint of even planning for, embedding out and trying to get a project underway, it doesn’t necessarily translate to when we would see sales from a new project because of the 19 months to 18 months of duration. But, so we’re definitely anticipating a slowdown in multifamily. Peter?
Peter Jackson: Yeah. Yeah. So, I guess, the comments I’d make when we talked about a bounce back in a couple of different scenarios, Dave did refer to it a multifamily, we talked a little bit about on single-family. So, I want to make sure we separate those two for starters. Multifamily, we don’t know when the pause is. There’s no question in our minds, downside is coming, right? We can see that because we’re selling into the middle of next year already and we’re seeing the declines in quotes and bids and so on. Now, the one thing I also want to be real careful of is, we don’t sell into high rises or some of the other urban environment. That’s not really our play for the most part, right? Where five-story and below would frame multifamily structures, which we do think is going to be a more responsive to the housing needs that we see in the U.S. market in this day and age, and some of the other dynamics that we think are favorable to that.
But your comments are accurate in terms of what we’re seeing. There is certainly pessimism, the higher rates have made deals and projects more difficult to pencil out and we have seen a downturn. I would say at this stage, we’re not seeing the numbers you’ve been teeing up there. Is it possible? Sure. Wouldn’t out — wouldn’t rule out it going anywhere. For us, though, I think our ability to do a couple of things. One is to, to scale our facilities, change shifts. But also the second thing is to rebalance where we put our load from a value-added products perspective. We can certainly move single-family to multifamily and vice versa, which we’ve been doing recently. So we’ll continue to do that and ensure that we’re protecting this franchise because we absolutely believe in multifamily in the long run, even if there’s some cyclicality in the near-term.
To your second question, which is the ratio of that multifamily business and what it is weighted towards. I would say that it’s probably 80% weighted towards the start and more 20% weighted towards the completion, just directionally and that’s because the bulk of it is trust and upfront product with a bit of it being related to millwork, which is a little closer to the completion, not at the completion, but a bit closer with that.
