Duncan Bates: Yes. Jay, 2023 was a pretty hard year for the independent dealers. I mean, you come off of just the market absolutely going gangbusters in 2022 up until the end of the year and backlogs being stretched out. So, when they were selling a lot of homes, they were ordering a lot of homes, but they weren’t able to get those immediately. And so you just — you had a situation where the demand really dried up from the retail customer. And then as backlogs came in, I think that there was a lot of inventory that was forced on these dealers and they were having trouble selling it. And then you’ve got the carrying cost going up as well. So I mean, I think a lot of these guys were in pretty tough shape. And the show was surprisingly optimistic.
I mean we were pretty worried about turnout and about — especially about orders. I mean we kind of thought that, at a minimum, people would come to party in Fort Worth with us, but we were worried about the order front. And so I think the good news is we’re seeing a lot of dealers sell homes and a lot of those homes have been sitting for a while. And so it’s good to see them start to move. We have ran some specials. And I think the sales effort on the dealer side was great. And now they’ve just got to focus on executing and moving any aged inventory they have. But we’re — what we haven’t seen yet is a reorder rate that’s as high as we like it. And I think that that’s mainly driven by the carrying cost of the inventory being higher. But I think as these guys continue to sell homes, they’ll continue to order homes and it’s nice to have that piece of our business moving in the right direction because at the beginning of the year, that certainly wasn’t the case.
Jay McCanless: Great. And then I guess you answered my price question, I think, but just this mid-60% — mid to low 60%s, you think that’s probably going to be a good number to use for the next couple of quarters for modeling in terms of average price?
Duncan Bates: Yes, I think so. I think all the customers are a little squeezed. You’ve got on the retail side, inflation has been tough for this customer, and they probably like a little bit larger home, but the payments may not work. And so we’re selling a lot of single lives with — that aren’t, I’d say, fully optioned. And then we see the same thing on the park side, where some of the community owners are going to a little bit smaller homes to keep the monthly payments down for the financing. So I’d say that’s a pretty good number. If we see a big pickup in double lives going out or we hit one of these workforce housing deals, there are a little bit higher units that could go up. But for right now, from a base case standpoint, that feels like a good ASP to me.
Jay McCanless: Okay. And then just one other question. We’ve heard about some commercial banks in the U.S. pulling back and exiting doing floor plan lending for the MH space. Is there any opportunity for Legacy to maybe go a little further afield and pick up some business as some of these banks have been exiting?
Duncan Bates: Yes, absolutely. I mean, I think it’s actually a pretty big opportunity for us. We’ve made some changes to our floor plan program and the team that executes it. But I’d say there’s a lot of dealers that we don’t floor. And so, there’s an opportunity to expand and add some more dealers. We’ve got other dealers that floor with someone else but carry Legacy’s. And so I think there’s an opportunity to convert those over to us as well as add more Legacy homes on their lot. And I still think there’s an opportunity to grow the consumer finance business. We’ve got — we’ve got a lot of dealers that I wouldn’t say we’re their number one financing choice at this point. And so I think there’s an opportunity to make a push there. So you’re adding floor plan financing, but you’re also pushing the consumer lending business as well.
Jay McCanless: Okay. That sounds great. Thanks for taking the questions.
Duncan Bates: Absolutely. Thanks, Jay.
Operator: One moment for our next question. Our next question comes from George Melas-Kyriazi with MKH Management. Your line is open.
George Melas-Kyriazi: Hey, thank you. Good morning, gentlemen. I have a question on production and inventory. My understanding is that you were sort of increasing production in the quarter, but sales, of course, were rather soft and finished good inventory, even though maybe it’s pretty high, it was flat sequentially. So I’m trying to square that and try to understand if you actually did increase production in the September quarter? Or sort of how do you handle that to manage to keep finished good inventory flat?
Duncan Bates: Yes. I mean production in in the quarter was down pretty significantly. I mean, I felt like third quarter was about the lowest that we were running at all the plants. And we still — we did miss a production day, but we’re really building three homes on average at each plant, which was down pretty significantly from kind of mid-2022 or third quarter of ’22. Now, we’ve got a little bit of an easy comp, because in the third quarter of ’22, that’s when we really started having the issues at Georgia. And so production was down in the third quarter. We’re taking it up in Texas now. We’ve still got some work to do in Georgia. We haven’t ramped production up there. We’ve got too much finished good inventory at Georgia that we’re working to move. And I really feel like by Q1, we’ll be back on track there. We’ll get a lot of that finished goods inventory shipped, and we should have the orders to start taking up production at that time.
George Melas-Kyriazi: Okay. And remind me, Georgia, that’s mostly park homes? Or is it also to the retail channel?
Duncan Bates: Yes, it’s both. We’ve got a couple of large park customers there. So, we have built a lot of that product, and they’ve been just kind of large, I’d say, good entrepreneurs that have large real estate portfolios, and they’ve bought a lot of homes from us, and they’ve been pretty loyal. And so, we’re — we appreciate them. But we’ve also — we have a — Legacy has a dealer presence in the Southeast through Heritage Housing. And we also have some independent dealers there. But as I add to that sales team, we’ve hired a lot of people. I mean, I think we’ve hired seven or so salespeople in the past few months. And we need to get back on track with the dealer business. It’s just — it’s a large territory. And so you can’t have two people covering the entire Southeast for dealers effectively. So, I think there’s a lot of opportunity there now that we’ve gotten through the quality issues and the service issues and they’re starting to regain our customers’ trust.
