CVCO - Earnings call transcript Q4 2022

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Fourth Quarter and Fiscal Year 2022 Cavco Industries Earnings Call and Webcast. [Operator Instructions] I would now like to turn the call over to Mark Fusler, Director of Financial Reporting and Investor Relations.

You may begin

Mark Fusler

Good day and thank you for joining us for Cavco Industries fourth quarter and fiscal year 2022 earnings conference call.

Chief be Allison Bill and Aden, Officer; Paul you’ll Chief President Chief call, and Officer; Executive Executive Bigbee, the hearing Boor, from and Financial During Officer. Accounting Vice President

materially results to including during performance, the events expectations contains with we’d over or of begin, of operational XXXX, recent the obligation in Boor, update required actual this Reform conference would materially time-sensitive conditions. factors financial May Cavco’s limitation, and accurate Chief earnings review as to actual Officer. of of may Securities you Bill is and comments by may circumstances live Exchange only to Cavco. forward-looking without law. the or also except the those in or Cavco Before or reflect expressed the operational share, Cavco’s whether no behalf the to cash from future specific call, efficiencies, of this Bill? statements turn from statements as the date future Private involve revise oral Cavco’s XX-K and to which and or in after forward-looking we uncertainties, call under like credit results Commission, market and broadcast, current conference identify by Friday, conference statements. cause to written and those forward-looking the events Act of Forms call Company’s like assumptions forward-looking I risks of differ XX-Q, per differ filings statements actual that to about XX, to described including remind or or forward-looking volatility undertakes call XXXX. revenues, President Executive on statement, any which results any I the that could the statements by made affect provisions or most or cost markets This made use, information that you cause could this date contain encourage Litigation management Securities flow savings, All actual its

Bill Boor

you be was the year. thank of market families about quarter, and underpinning supply a levels. impact, before than year more financial the and XXth our X% were quarter facing over attribute year last we’re we over homes fourth year about line homes fourth XX% the by ago demand significant price we in was given acquisition corner, our a review able which increased been in to fiscal XX% It’s year XX,XXX XX% and ‘XX and years operating results Each revenue increases, turned XXX%. makes pre-pandemic to X,XXX but Fiscal record capacity by set challenges, to the significant and before XX% hit provided quarter of several this the and edition, in of importantly, we to country. well for us this the we’ve the and another Commodore ‘XX, earnings, XX% that continuing of even without labor results revenue to Welcome results. new row. joining these by as to forces, range. a both XXX%. fiscal our the in last a This different X% utilization it were Despite top or grew today gains Most we’ve our for records, The earnings earnings by and from an we approximately a across particularly The only performance year, past gratifying to report would’ve solely had revenue not to is tempting pandemic. improvement issues, which profit the but grown making above strong

on is focused staffing complexity our with compared quarter. the extremely and homes, has been production paying was they’ve customers a retention. which product doing improvements off have work more fourth to last XX% what been to most. up plants year’s And to basis, plant reduce have been increase Our the same On needed

customer have deposits We seen which remained watch retail, quotes, Similarly, of healthy. leading not indicator we a traffic a drop-off in demand. and as have

the backlog needed orders healthy in above accomplished significant flat a in reduction productivity. on backlog Our and and in We’ve strong quarter, up year-over-year, weeks was levels. a again, sequential significantly basis pre-pandemic of remained the through increase

ended backlog the weeks. at quarter to XX Our XX

well-run our is to operations customers ability provide continue and our to our Arizona; Hamlet, operations. enhanced and returns. strong businesses. services the North our coming Carolina serve financial Glendale, insurance new will Additionally, months, by lending greatly and our plants And begin consistently steady In growth in

stock ‘XX, plant system, while making repurchase the throughput which also $XXX this we earlier projects. During Commodore, state-of-the-art our we million completed fiscal made investments, our We year XX% initiated to we capacity. approximately month. added the authorization investments acquired And strategic across those

our year-to-year. with our capital objectives us demonstrates to our value setting giving to to commented provided challenge to because in of our new And consistent limiting uncertainties the is this stated Directors records The specific that the tool of sheet. our growth year. call continued important the from access every new of changed responsibly a All week, allocation Board this this without I manage strategy. ability of directly return is and uncertainties at shareholders reauthorization balance beginning coming year, a

years, on activity. completely supply that was become few of more COVID’s economic questions that we hopeful a options the persist. less Certainly near-term. And trend. Over gone we not payments, Rising increases expensive, particularly pressures. affordability. This under face seen has away. housing? of labor it new huge without regarding a years, don’t know and continue will supply challenges buyers rate rate their We and the forgotten over point rates the dramatically the that in question home clearly risk of And buyers monthly increasing be is year, price And thereby some housing, increases past that What stating left increases to of that know price rates ability impact to past the the have lower erase that impact many couple increase already home decreasing Interest we’ve expensive the obvious, additionally, economic move general as alternatives. own concerning fundamental buying undersupply. the can

While positive never better. historically we competing into and rate in aren’t has able rising we to specifically site quality manufactured continue real. is build the the of the And prices to quantify solving it, manufactured of This on known. this and home been buyers demand has of for value from environment. role happened and the strategic buyers these housing to homes extent closely. offset expect which housing that not course, movement over yet dynamics of is rates The confident, these of deficit be housing very planning will And watching in the any impact increasing we’ll timeframe. play manufactured the higher increased I’m

we in of of. Beyond markets, have added MH have shipments a taking scratched the areas, the increasing traditional into surface urban share we opportunity barely dynamic

optimistic results time to I’ll extreme So, any monitor Allison shift confidence this to the to I do we quarterly in I’ve With in turn dynamics our again. successfully ability organization’s and people in it that, as seen and have over detail. remain and market more discuss adjust to

Allison Aden

Thank you, Bill.

million, results revenue units fourth for by during Cavco was net Net the quarter up to fourth resulting year’s Sequentially, We’re revenue of report The from contributed shipped, an mostly quarter. third million and revenue acquisition in net fiscal record-breaking XXXX. the once Commodore increase. to period million this income fiscal XXXX, achieved again increase XX.X%, $XXX.X from the $XXX.X $XX.X the fiscal quarter for driven net Homes pleased year-over-year compared factory prior year the XX.X%, higher utilization. of of increased

Within increase was in in increase home built is a mix increases The addition prior in $XXX.X largely to increase sold. to of driven per increased revenue revenue homes. quarter. due operations extent a The housing product and from the market, $XXX multi-section by per lesser XX.X% product both, factory average million year Commodore pricing shift and to revenue net XX% the sold million the to average more a home

higher pre-pandemic factory during We’re pleased exceeded quarter, XX% levels. slightly than utilization report to the that

percentage to simplification. earned margin challenges increasing $XX.X by segment, from acquired by material mainly services net materials home to policies lower last due yielding results protected, The and lower successful million revenue driven the consolidated year. XXXX. close this resulting increase production negatively QX disruptions. period lower priced by QX been in to gain marketable and QX offset from in our in basis million a versus Commodore now was gross gross increased quarter is to lower and margin increased X.X% XXX consumer factory per loan lower acquired XXXX. of sales. These portfolio, production revenue profit as fiscal housing decreased from XX.X% XXXX income. costs XX.X% the the of home as a supply XX.X%, improvements, headcount on net and hiring backlog Financial interest converts income was impacted decreases While force. margins operational same fourth in the sequentially XX.X% acquisition increasing of $XX.X was of partially from segment in the in Material offset levels, achieving in third by QX product equity module. to XX.X% This and gross of insurance were experience partially continues building built pricing The and sales gross points. We’ve Commodore’s of in approximately efficiencies securities cost backlog loan The unrealized on the higher quarter number up Consolidated a therefore

compared common Commodore income XXXX, year, driven realized XXX% gross which margin continue attributable lower benefit result last million in general percentage the by equity the $XX of margins Pre-tax to the quarter quarter in same This a increased of to Selling, on the income interest same from commercial earned to fourth of and Net to protected marketable up commission after in compared as next in process this XX.X% XXXX. unrealized or through compared this increase the greater XX.X% level acquisition. to and marketable offset partially quarter quarter the fiscal revenue this our the financial Commodore unrealized Cavco decrease higher way backlog, and of by revenue other the attributable of due XX.X% profit net to securities, shareholders equity year. couple losses Homes quarter. During from per working tax quarters, Commodore XX.X% the loan is stock on both, balances, to quarter, was to administrative $XX.X QX and rate our QX $X.XX expense Net from same or in $X.X was to services increased period year Gross was primarily on the was QX $X.XX weather-related exercise $XX.X income year to fiscal million decreased the price incentive in This securities. for was up improved improve for $XX.X that. in net revenue, quarter of at XXXX prior compared prior Net is the wages negatively events, a the fourth compared million same $XX.X margins we to XX.X% XXX.X% tax as to addition income lower year. year. year. higher $X of net of million, rate during million prior the for interest versus tax in $XX.X effective in of million expect the impact to and of gain due XXXX million a diluted on quarter per XX.X% fiscal earnings. of million current share legacy last income to The is Cavco The last our but consolidated the share to stockholders expenses of options of quarter were period. from

it Now, to over discuss to balance the I’ll turn sheet. Paul

Paul Bigbee

Allison. Thanks,

income on of in property, from increased and decreased compared changes changes and loans deferred the Craftsman the working year liabilities receivable, items, The of noncash resulted million income and of all rebate payroll Homes, wage also XXXX plant equipment, held ACT consumer cash for represents the customer new Accrued assets related Uses in to loans to accounts inventories, previously acquisition in loans ‘XX. million, third stock, XXXX net in was due cash of than inventory I’ll a balance receivable amounts investment higher loans. commercial recognized repurchases fiscal is by the Consumer energy shareholders other So, Commodore including increased and receivable, Prepaid current Craftsman These liabilities, and partially other originations deposits. and and were homes. year $XXX.X X, April collections X, be the a reduced down April of equipment. XX.X% that accrued from the of tax and the under loan amounts. payable greater of property, include assets securitized. principal and acquisition non-controlling plant and of The expenses ago. sheet loans common in XXL tax sales that of from and offset balances intangibles, balance purchases receivable primarily collections uses $XXX.X by craftsman higher covering value goodwill higher were from tax Redeemable interest line Commodore [ph] to during Homes the efficient principal credits the item interest accruals consumer increases CARES that capital, and expenses. accounts in volume and non-controlled payments quarter cash on

as million XXXX, $XXX.X to $XXX.X it million X, of of April I’ll stockholders’ April from With turn was Lastly, Mark. that, back as million X, $XXX.X approximately up equity XXXX.

I think we’re for ready Q&A.

Operator

first Instructions] Moore comes question CJS Securities. Our from [Operator Daniel from

Daniel Moore

Thank you opportunity Bill see capacity, color. the production Allison XX%. -- we up to move up into continue the you. for And to fiscal to of the Do job to first utilization just as great -- thank ‘XX? unit doing increase talk Maybe with a half and obviously you about

Bill Boor

then we’ve Yes. work comes better specific have around got on product lot but from of continued said, I and productivity. don’t think as if us there labor. doing that the a of And real better of some targets, you it, had simplification. momentum the We we’ve with seen think and We’ve about a And I any job lot long backlogs. fruits a

work of and orders a at when to your even you you’re to product delivering through simplify to mix. a that product get decide So, you simpler of kind that you’ve mix committed lot to plant, got

try from upside quantify ability to do there’s don’t Dan. really for have you think I I it right the to So, there. now there,

Daniel Moore

see way? the How bottlenecks kind about the the on any of supply or any down easier incremental Do this is chain getting -- things you or coming normal front? new in pike

Bill Boor

it’s throughout it now been think is think getting this normal kind has that kind don’t this of normal. as point. some of It with it’s as I folks yet experience laughed at this I I’ve easier. it -- feels feeling more difficult and

and solve. -- a well, I’d plants Our it’s anyone it folks for thing done able persistent, a to it’s different more transitioned to challenge, the generally job. every lot problem talked material And when more we’re great driven to not think But a very know, a any a recently. has been -- be but going say has light supply up, a it to have me is expecting logistics trucking becomes into persistent time new forward a new to that it’ll as I been that by give I’ve insight while.

Daniel Moore

then another and a fiscal cadence quarters should there between And we and -- glide falls it lastly the XXX end talk sort let’s you two Commodore expect of for Do on Or the of margins, path basis the is just going about now of say margins of QX? impact from points next forward. off?

Allison Aden

to -- last the the after on it we Thanks. next appreciate With to what of for continue. basis-point we to consistent with that the couple price call. begins and I shared conference question, quarters begin convert as would then, and off sales. just And for with drive expect XXX backlog ease protected the will Commodore, the our to

Daniel Moore

from on any retail rate up retail partners that one, themselves, strong, anything seeing last or front? your cancellations, And Are custom with either But -- you keeping apologize. customers meaningful about talked I Bill, production. order your anything you being

Bill Boor

up complex up ask you, really a again, But And follow tell say And I a I to at clear. what here hope if been look this I not hope I’ll back -- and and Yes. question, please what we’ve answer. seeing. isn’t

up accelerated. start it on think then before, had the several rates I was that, heels seen end last important. of as to calendar interest as And move going this months, of particularly almost the right early up. much The year, we the year, it it’s pricing, we’ve

a swirling going it shifting so, almost on. like a or described And I’ve as

orders, deal buyer very had largely there’s the on existing the dynamic that of kind Some The been a ordered. that for qualified if falls retail for through sold pick has of out there being they a retailer can likely a homes unit. fell of though people that unit, up another

as deposits, So, there’s an been a well still seeing retail demand. as necessarily indication our and Traffic lot of independence. shifting, still but our it’s getting of not we’re underlying is high in

we a haven’t facing. seen off that So, really are payments monthly chaos, seen more of because bit rapidly of demand, people a really definitely we’ve accelerating the tail but

what it’s don’t my going in but described. seen to really think on market, opinion. price impact I of be have So are underlying we’ve lot in yet indications drop-off seen this disturbance we’ve at as a of demand seen point, rates and to a really the I

our the to. undersupply in going back true face, country. to fundamental refer this is what’s there. into alluded to I’m demand So going I out of flow site just from the always that is build manufacturing down favor in is we There housing the

So, to for going either think on demand trying looking interest that reaction pricing rosy is really and to a picture, I time indications not a we’re paint but a what’s a rate of pessimistic bit shock. of at when or

Daniel Moore

appreciate Now, rather confusing, the back with color. follow than that’s I’ll I extremely actually helpful. any ups. jump

Operator

from comes question with Palm next Craig-Hallum. Greg Our

Greg Palm

across different across that pockets channels, board any you’re quotes, differences measured demand. talk traffic about various of terms of, of retail consistent by in geographies. curious geographies on whether significantly quarter-to-date maybe the community, that’s all up just demand, I’m on whether can where and whether and orders, you it’s seeing following question it’s whether maybe Just from pretty sort if both i.e.

Bill Boor

as particularly REIT they’re to talking a important been versus community or the many I’ve last the with houses and -- community month about operators, demand, so larger type us can the quite is customers plans still retail the of And as point That’s community the their in bit. a can their good an make. well. get as interest you growth community, Yes. operators, we

were now. So, know That strong think predicting I while. very and doesn’t going really mean I communities be just to be remember retail big ago, they for some opinion. now, drop-off. the my potentially again, real driving that to they to this poised don’t a will right of several right I’m seem demand I’m very a in communities, of really seems are that pick up growth years industry. seeing strength -- which the And And us

does like there. like that’s to a it So, me? But trying do through we stronger of me your it other everybody wanted we’re to question to little you remind feel -- else. I now. part the right can catch But sort

Greg Palm

Yes.

Just differences out whether of see in you any there? terms geographies,

Bill Boor

Yes. Thank generally you. no. I would say

similar. the pretty We’re talking country. that dynamics in And probably on I like is any seeing of wouldn’t the to bit folks southeast. across are that there we’re we’re more way that area But If just southeast, queued going dynamics, a different a seems in markedly the our I think think it’s describe swirl little the a little there’s in it I that potentially. more,

Greg Palm

shift lives order in mix multis last difference whether homes the seeing book just in as curious your the less few recent if with versus backlog? that’s single months I’m of changed that’s what year-to-date? at you’re maybe about Curious options? the What all, or in into or more quarters,

Bill Boor

that that to we at at feel, behind this seeing difficult, they’re were know of or price able thinking we’ve becoming while because able multi-section. that manufactured I are think from for more -- I quite mean, barely And a as and a dynamics toward that the the just and points guess, housing But also bit so. a site we’ve there’s lower becomes the been little and transitioning people buyers know price little is to Greg. we steady I afford. are just shift built I point. product now talked that buyers not afford And affordability don’t buyers higher to all mix, logic -- there a the about, Yes. bit think are

And too, logic behind any recent some that’s dramatic of the we’ve far of in continual tough shift simplification as as little toward But multi-section. kind in includes options, there’s our because this what’s don’t think question, backlog. So, really reducing noted quarters, a product change, bit I options. a and

we’d by So, indication than what be interested by in people probably if of we seeing really buying. more our offering driven dissected the any are backlog,

Greg Palm

this talk That product maybe next a longer to How much my about just leads increase just simplification? been me done? already sense of about, to a to much as that can I’m talk question, which how continue or left these maybe suggests get term is while. whether is to go? that’s of that for a is production trying efficiencies, on Can what you journey you

Bill Boor

a earlier have while. lot backlog backlogs it. on going still options, to going the to or not if as have, getting plans new have your decide that We’re for of in as a that today offerings, many you we with was you’re to comment My make what’s you’re many floor

So, to we’re major how well that. you But of it, don’t they’ve to into benefit providing we’re that the a way But, how dealer but how our is with come. are plants separate we been products far example, it are aggressive to working about it’s factor our a customers, pretty we I in really I from get I yet for done have know kind take and it. to market. far into matched to that think a that the while still think, believe

our to staffing So, our skills kind the up And team, building and I in to question. increasing of that. of the to all from going retention not continuing utilization not only middle no, I the go, answered up is it’s as more think to there’s only come and come our simplification, us the it’s from going of get earlier

to come. more So,

Operator

Ian next from Gabelli Funds. Lapey comes Our with question

Ian Lapey

earnings growth. and the congrats Bill, That’s on of to revenue tremendous. you the Hi. team XXth and year

Bill Boor

Thanks, Ian.

Ian Lapey

MHI coming there capacity at And got that two in the A data, March. increases? know XXX like What is the looks plants couple more were competitors outlook What If it you’ve on I you about I for hearing line. are in look from industry questions. regard?

Bill Boor

some going I think of on. there’s that

few a It’s on, like about which have hear be You absolute really the factors you to limiting I new not your thoughtful ability but supply right And apologize here I been. production. capacity for, to and huge. plants now, broken have about think record, there. really bringing and the staff feel I

So, been I bit a issue couple Historically, inputs. was, that’s of you hasn’t governor. problem distributors. space, it’s get think can That get been a the the about you Last of more market can years, or been the concern.

that’s think couple adding I I think So, wave are big a I obviously, here it’s of don’t as know though. governor, coming well. there a created we’re but a that and and adding others

Ian Lapey

Okay. now, And And terms in how mortgage rates? then, are chattel much compared consumer question, delinquencies? mortgage are any of have you they the what seeing credit, in say increased pickup roughly site rates then, last built to

Bill Boor

Yes. Right.

homes. some think good, have -- about people seen First performance been has would the buyers been the delinquencies, lending throughout, priced in I those their pickup while time they The people getting to by has credit. any have homes, them are really pretty for disciplined get qualified don’t time pretty think we’ve or that of out they the part, the industry because gotten gotten I

any So, issue there. seen I haven’t

only home asking you Were or home? rates. about specifically land about question Your

Ian Lapey

only? Home

Bill Boor

interesting And only everything everything But we’ve a past actually there gotten recently. until upper-Xs. X%, to to And down mid- the crazy. X.X% move that’s really the in some so. bit for the incredibly pandemic, a when saying Yes. stable always or say, But in range. That’s rates range that where now, month dropped a call X% the while from little it’s running up. a relate And X.X% thing let’s beginning at started the that anywhere seems that there’s now the about We’ve low-Xs that like I’d I the got last it say below the home in is to have. it’s of data the range been to talked in we to were the because maybe been cases the they’ve that beginning interesting -- at to they’ve

bit really has recently. quite it So, increased a

Operator

the further questions closing like remarks. showing back And CEO turn over President Boor, and I’m not to any any call time. I’d to for this Bill at

Bill Boor

shining with Award these the on work outstanding because our due the folks to Martinsville in partly I moment led local to is the to plant’s why want rent. Okay. a little Impact Community industry state, a to bring issue take a this multi-entity within income in up A that to not our And these federal is this is I month, recognized homes And This the talking new Virginia association’s will levels past families deserving and can address own the Yes, an affordability impact it $XX with Cavco This right a bring $XX into achieve example ago, And participated recognition, homes. partnership city. wanted we help and per to about, leadership, in deserve I there was hour that are impact but it’s This about plant to groups ownership. shifts. up range. over some moving rate they a quick just leadership plant. think there ceremony area recognize this nonprofit project. And do a our year, workshop area. year and truly targeted currently cutting and is the for everything we’re the ingredients are ribbon of people their redevelop and with pricing affordability to also, it I home here. development affordability and Martinsville,

work. So, it’s important

Cavco. throughout really lot to had forward everyone really been thank everyone. results areas contributed to your keeping today. cause appreciate plant of but outstanding, want a business to still Martinsville the We the All of to recently. we’re we look trying year. a our have truly Thanks updated. outstanding this you think, I company I with And that, have connected like to has an time impact,

Operator

today’s conclude presentation. this gentlemen, and Ladies

disconnect, may have day. wonderful You now and a

Cavco Industries (CVCO) 27 May 222022 Q4 Earnings call transcript