Could be MH, could be single-family, but we want to maximize the value. And so, that’s bucket number two. And then bucket number three is Del Valle and Horseshoe Bay and some of the other projects that are further along. And I think we’ve got to accelerate those to create value. We’ve now got a full-time team working on these projects. And I still — they’re newer, they’re getting up to speed on what’s been done historically and what needs to happen. I’m hesitant to give you a timeline for Del Valle because we’ve shattered it so many times in the past. But I think by year-end, as we start to get the roads in and the water treatment plant is being built, I think next call, I’ll have a really good idea of when homes actually start getting placed on those lots.
Alex Rygiel: Very helpful. Thank you very much.
Duncan Bates: Yes, thanks, Alex.
Operator: One moment for our next question. Our next question comes from Tim Moore with EF Hutton. Your line is open.
Tim Moore: Thanks, and congratulations on the continued good operational execution.
Duncan Bates: Thanks, Tim.
Tim Moore: Yes, it’s vastly improved since you took over Duncan. I just want to kind of follow up on a thread that’s probably all the investors’ minds. I mean your gross margin has done impressively, if not surprisingly well, the past three quarters despite the industry volumes downturn and even the minor ASP drop in the spring for the industry. So, just for the September quarter, you just reported any way, Duncan or Jeff to maybe parse out how much of that gross margin expansion in the quarter came from maybe cost deflation versus any benefit you might have had from some conversion of floor financing?
Duncan Bates: Yes, there’s no floor financing in this quarter. And so really, I’d say the majority of it is just from better execution on the purchasing side. And I think we still have a ways to go. I think that vendors are obviously reluctant to give price decreases unless you really push for them. And so, the majority of that margin expansion came from purchasing. But labor has continued to go up. And I think the market has softened a little bit, and it’s not accelerating like it was through COVID. But that’s something that we’re certainly keeping a close eye on is our — in our labor cost per square foot produced, and we track it pretty closely. But I’d say over the last five years, you see a continued increase in your labor cost.
And as we talk about ramping up production and hiring people, we’re certainly paying higher wages than we did four, five years ago. So, the goal is to continue to push on purchasing and add labor to ramp up production in an organized way, instead of just you pay a bunch of labors, a lot of money to stand around.
Tim Moore: That makes sense. I mean, it really is very impressive what you’ve done with the gross margin. So, Duncan, maybe you mentioned in your prepared remarks that Legacy close more loans in October than any other month in Legacy’s history, the consumer loan front. Can you maybe share with us just the cadence — the monthly cadence during September quarter? In other words, was it incrementally better every month with the volume and the orders from July through September? Just trying to get a sense, maybe if you’re kind of seeing a bottom.
Duncan Bates: Yes. I mean, I feel like internal sentiment from a sales standpoint was the lowest I’ve seen in the third quarter. I think we’re in a much better place now. And I think that the success of the Fall Show was a big step in the right direction. That was something that I was pretty concerned about. And we sold a lot of homes, and that’s great. How can I answer your question better, sorry, Tim?
Tim Moore: No. I’m just trying to think now that you — if you kind of parse out that amazing show you just had, demand and orders, I mean, do you kind of feel like the floor is in for the industry maybe on volume and consumer sentiment?
Duncan Bates: Yes. I think volumes — we’re ramping up volume. Sales are looking good in Texas. And back to your question, I lost my train of thought, on the lending portfolios, we haven’t changed anything. I think the increase in applications and actually closing loans speak to a little bit of a pickup on the dealer side of the business. These loans don’t close overnight. There’s a whole underwriting process associated with them. So, it’s not perfectly linear. But we had — we saw originations this fall or applications reaching pretty good numbers, and Brandon and his team that run that business for us just did a good job of execution in October, and we plan to keep it going.
Tim Moore: That’s great. I remember meeting Brandon a year ago. And my last question is just regarding the CFO role change. Maybe can Jeff comment on maybe what he brings to enhance Legacy Housing? I read about his accounting background and his finance experience. But maybe just give us a shot to do a little commercial on what he bring?
Duncan Bates: Yes, sure. I’ll turn it over to Jeff, but I’m happy to have him onboard.
Jeff Fiedelman: Thanks, Tim. Thanks for asking the question. I’ve got a pretty diverse background, good operational background, especially in manufacturing, and really good experience helping businesses grow from one stage to the next in terms of process and operations and scale. And I’ve had the benefit of getting exposed to Legacy a couple of years ago and learning the business a little in a consulting role. And so, coming in, it’s been — you always have that luxury of knowing the business pretty well before you come into something new. But it’s a good team here, and I feel like I bring good solid experience across the board from an operations perspective, from a finance — corporate finance perspective, and on the accounting side and getting through some of the issues that the company has had historically.
Tim Moore: Great. Those are helpful insights. Thanks for sharing, Jeff. And Duncan, thanks for answering my questions.
Duncan Bates: Yes, thanks, Tim.
Operator: One moment for our next question. Our next question comes from Jay McCanless with Wedbush. Your line is open.
Jay McCanless: Hey, good morning, guys. Welcome aboard, Jeff. Duncan, could you maybe walk us through — I mean it sounds like the show went really well, but what was the feedback from the dealers? Just a couple or three maybe high points you could give us? And I mean sounds like with the order rate, it sounds like they’re getting more bullish as we think about the spring, but anything that stood out from your talks with the independents?
