Earnings call transcript Q1 2024

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Operator

Good day, and welcome to the Cavco Industries First Quarter Fiscal Year 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your speaker today, Mark Fusler, Corporate Controller and Investor Relations. ahead. go Please

Mark Fusler

thank First and joining for us Good Fiscal you Year Industries Quarter Call. XXXX Cavco day, for Earnings Conference

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

cause cash performance, remind financial or we'd expectations Cavco's share, actual cost forward-looking those comments statements the statements revenues, operational or conditions. statements that on of per which made and use, management differ during we begin, you materially by could any contain statements earnings without encourage from flow Before and in this savings, I most may cause filings including, the review Cavco. to forward-looking that uncertainties, its forward-looking efficiencies, or or to volatility could future you made assumptions events may Commission from the company's results All actual Cavco's forward-looking affect about results described factors XX-K materially in to involve and with behalf current future or by differ recent and in operational which or risks like to expressed and statements. the results the credit Securities specific actual conference Cavco's limitation, Exchange those call including markets market XX-Q, identify Forms of

conference oral, as as XXXX. or to of law. or of except circumstances This conference Cavco date only revise statements, obligation call August also of no the to date or forward-looking events by update whether the accurate, information contains live this after is undertakes broadcast, call, time-sensitive reflect this required any that written Friday, X,

and turn to Now the Chief call President over I'd Officer. Bill? like Executive Boor, Bill to

Bill Boor

review quarter Welcome, first and us for our results. today to you joining thank

and essentially up movements financial dynamics. the relevant the earnings operating primarily to quarter this was From the in results with understanding current year-over-year think QX. sequential release comparisons, flat, provides more like about I volumes an very which consistent were X%. on I'd focus While perspective, are Sequential

flat at million. was pretax profit slightly million was Revenue and from $XXX to $XX million $XX up

utilization, available remain at days over approximately well as capacity XX%. Our consistent measured all as

the been plants of most a remaining schedule, steady on four-day operationally, with managed by gross quarter are and being at it's the reduced margins. a pace So our as indicated strong well costs

to change notable in quarter most production showing wholesale from a lower that weeks, six wholesale this pickup still edged is The weeks orders. orders. meaningful five was seven to Backlogs to eight outpacing

few activity. was in in continue partly improvement in now rates pickup then meaning partly to trends We these order were change the buyer increased past more over considerably control, orders with from see we'd attributable under to to and to home improve. are is in able did orders to pace largely up ramping reduced than and modest there. quarters, capacity achieve the production retail and start up The of However, utilization be balance QX. due it's need our rates the year-over-year up which the inventories, Order

independent and near our economic general rates there's confidence remain underlying a on the in across questions that's confidence dealers and business and the Interest and demand, and retail quotes our In for activity. buyer traffic, the communities, overall based continued term.

to However, the soon wholesale return homes believe support the as develops. and as full bottom we orders given order of schedules positive the seen market production we've trends, to looking we're

variable as controllable the helped This environment and done healthy despite quarter our model pricing a plants at is continue I operating have result. gross by times worth last an spoke these despite to in ability keep lumber of on margins but quarter, noting our factories managing about centered order generation margins certainly was profit gross job outstanding and business costs to rates. remained The OSB prices. as possible that the as healthy think challenging XX.X%. this Factory-built cash healthy reduced selling it's continued tougher production -- in and and by our our this

quarters the retail market we in a line very progress been focus existing The been developing the deal. has two the closed with updating good to out and on high-quality of fast offerings continues well. on to to focus the round operations opportunities work the a companies spoken been area We've lower-priced models Solitaire new there. past has across made since needs. products with about current combined It's lineup product One on in go combine the and

purchased As acquisition to expected. the and very Overall, no that people our as surprises, joined have great been there impact inventory, results family. we're on Solitaire's with the happy the have work-off we Cavco our continue will develop and

With that, to turn more it I'd to to results Allison the financial over like detail. discuss in

Allison Aden

prior for period Net or million Thank the revenue $XX.X was $XXX.X XX.X% year's the quarter. fiscal you, first $XXX.X Bill. during million, compared to down million

to $XX.X quarter. was in net housing $XXX.X decline or per home revenue by average homes XX.X% prior in Within in the a business $XXX.X acquisition decrease This decrease the revenue primarily and million, segment, Homes million base was offset $XXX.X factory-built due a from quarter. down in the million million Solitaire which the sold, year contributed partially sold

utilization lesser single-wides home days, for weather, production decreases. consistent revenue XX% approximately a The but was XX%, of primarily the extent, decrease all fourth excluding pricing of QX and per downtime with in to due in available was XXXX marketer more nearly After of when scheduled XXXX. product quarter to was the considering mix average fiscal

net primarily basis in million and gross profit policies rates. premium quarter Consolidated last from XX.X% insurance of higher increased force XX fiscal in Financial from the the first as revenue year. same a due percentage services in segment net $XX.X million, the $XX.X XX.X%, up XX.X% period revenue more to was to points

by increased lower per points primarily to factory-built driven material versus the floor. gross QX XX.X% profit the of of segment, in XXXX basis dollars In XXXX, housing XX in XX.X% QX

have Therefore, negative impact approximate no point is upon basis recorded acquired a at continue is gross purchase on operating accounting the As margins expected, acquired fair acquired our anticipate impact the when rules, accounting inventory price. We quarter. Solitaire income Under for same quarters. adjustments value, XX sold, recognized. sales on two this purchase inventory seeing is the next to the which inventory

margin long resulting Gross from storm events, a a and weather decreased claim percentage of XX.X% activity revenue expenses QX as higher financial in in of QX from services XXXX, Texas. XXXX insurance included daily increased of which very period XX% of to in from

third-party same lower partially incentive were Selling, in Homes year. costs. the SG&A offset expenses to addition costs compensation The general expenses last of these decrease primarily due support $XX.X by and million costs, and to administrative the during lower $XX.X quarter million compared Solitaire is

prior quarter. million expense the our programs. for primarily down to in equity for year higher the on million income year the million, year The the This net year gains period. primarily lending income commercial to by up XX.X% $X.X $XX.X of due $XX.X securities to to Other this from or million $X.X quarter. cash XXX% was in million year. $X.X was rates Interest the increase current loan quarter $XX.X compared in interest increased on increase unrealized is compared was Pretax under compared held driven greater the losses profit prior is prior prior first to quarter balances investment million

the XX.X% had for rate. of last quarter is yet indicative compared Star Energy future year In in was the our current the tax rate first income tax effective extended. and had period been fiscal same period more year. the to not period, fully expired prior XX.X% The credits rate Therefore,

the shareholders Cavco to was share $X.XX attributable last million prior year's in million quarter. XX.X% was compared fiscal income Net million from the $X.XX in or first down per versus diluted year. this quarter Fully first of $XX.X to share earnings $XX.X $XX.X per quarter

the Before a take we to capital balance sheet, discuss to about talk minute like I'd allocation.

be Directors stock the new announced our the with company's to purchase amount repurchase that our increases the remaining includes $XXX.X of stock. total common a million to This Board program This release, year. announced may program As under last availability outstanding approved press million. the used previously $XXX

with deploy our we strategic in priorities. will With responsibly continue that, to keeping capital

further plan the in ongoing remain priorities evaluation and capital lending our acquisitions Our improvement, operations. opportunity of

tool We manage will a sheet. buybacks as utilize to continue responsibly balance to our

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

Paul Bigbee

X, $X.X primarily materials million the Thank cash balance at million XXXX, increase retail working the as from finished due of end and million, to you, prior When up decreased balance raw such depreciation The including goods non-cash me net items and is income $XXX.X our sheet XXXX, expense, the was $XX.X to July for the lower adjusted factories April year. X, which $XXX.X capital Allison. at locations. fiscal inventory, or and our million at compare XX.X% adjustments, from compensation stock other

net by expenses. offset sale Cash of lower and also are greater the prior and the Homes. equipment fiscal exceeding Property, is million from prepaid other and loans Solitaire of commercial received. up originations from than equipment acquired from at And the partially increased stockholders Prepaid payments year. to assets amortization end $XX normal consumer loan the of billion, exceeded equity plant million prepaid down $X taxes lastly, originated, with sale down $XXX.X of due

the review. concludes financial This

Now back Bill. I'll to turn it

Bill Boor

Paul. Thanks,

the an costs homes Everyone help demand challenging. ready we highlight for the families can Cavco to inevitable Our cash at we of get view and results even of need. return manage our organization as are this when what ability conditions quarter they is so generate more

open and the line With questions. that, it let's over for up Abigail, turn

Operator

Thank question-and-answer you. comes At with this Daniel will CJS the question from Moore session. [Operator Securities. first Our we time, Instructions]

open. is line Your

Daniel Moore

retail, you, the to very channel throughout that, Bill, about end Maybe far cadence like of the morning. Allison, across Bill, for markets, demand. and what's Thanks if and Sorry color in time REIT the was delineate can muted. orders and -- thus of quarter and Paul. into then terms Good questions. the fiscal community the Maybe and QX? order developers, helpful of taking with cadence the starting look Thank you

Bill Boor

Just differences between relative kind of looking those? for

Daniel Moore

of the And continued the whether that's Yeah, exactly, in current improvement far and rate quarter. thus exactly.

Bill Boor

Yes, left order it the fourth quarter period. the has I think the I basically continued. they and talked that we time about confuse time last fact not -- levels mean

as I stronger right, continued seasonally, And it. was kind owned January, that of because take dealers, I would strength, your independent think, kind deeper, what obviously last you question, see And order had Cavco quarter. really strength it as through. carry think pretty So said, and we of To a expect to increase of from that's this the than rates reported are we quarter. nice good I March this that coming lot of in is a to And stores but was stores. on part is it the sequential

this during that is immediately to an we it quarter. not about on-off I And we the was be from talked like but behind total us going largely problem. to sometime was case inventory really thought that a quarter, last switch, the perspective. first going We've said -- it's that And that's think inventory

And of so right X-to-X away, a lift get need and another house you right? order starting kind to the the they home factory. from to They get of sell orders, to

of last So it out expected to that's kind as we quarter. when we talked played

come of really So has in uplift from rates the the a dealers. lot order

are communities it's The mean little about. lagging bit. think to interesting a I

they're we've dealing two problem. talked problem think think generalize think the this of in takes thousands their the it's And inventory with inventory I I own community communities out I there. across forms. form that an are But hard and of to the past,

to they've slowdown those are homes. Some that a in be set houses ready seen have occupied and filling communities

going not be an And ordering So the it’s be fast, going kind of to not of wholesale side to they're they're orders. then ordering. either/or on but their slower is

able communities, largely we've were that They when set-up this, set have unset delivered they and that of get crews. they have in talked crew been place ordered to previously homes. they to other due homes permitting to then haven't and And inventory problems,

ready if they get they but have to could be they're demand quickly, And they homes occupied. not more to do so the able feel set their

are is So complicate in mean while think the orders going orders we've upswing, got this, that total but of to I the are the lagging on retail don't that a bit. on effect all a community community little I And side.

and our macro in slow REITs. large best our and up year. interest seen a down. ordering people of pace year, And higher looking which to kind see start that, that, calendar permitting, that's factors both that some about orders feel issue also of community all. the from upswing we've Every big always all say folks, be I expect But shock talking upside rates I've We've this pick time improve, by level with ease will this the there's what when communities macroeconomic and will to talked the heard like to talk up to forward, we've to at assuming the right? communities a I of -- kind that's now. a factors things we've are the of estimates of or And end will I There's yet seen got happens calendar think allow we'll

a So that mouthful, did I Dan, cover was the basis?

Daniel Moore

that next a I any the extremely just maybe year? delineate bit about communities balance that, there? found and the look described we as was that No, delta Without plans And further just you helpful. the between doubt. in likely or difference their a saying And of REITs, between year and what little fact, they're to factors

Bill Boor

I'm therefore, delineation. REITs the operators. of community talking for I through what asking the and not you're kind sure was collectively

Daniel Moore

about That's your… of maybe fine. offline. But We kind finish talk that

Bill Boor

Okay.

Daniel Moore

to directionally I orders your need mentioned, to in believe expectations for As see heard in are What build. you utilization, that uptick order to start to continue I you correctly. an see factory shipments -- of to we basically from QX shipments thoughts? little well maybe bit your as as flattish expect are What ASPs a a pull which little back? for be here, fiscal

Bill Boor

We away Yeah. of kind changes guiding it's from still to subject I in think market. the because stay

guess away picked up, direction And the saw comment of as pace time. that matters, it's of of being but because And a shy was It it making that improving And the in smaller pace backlog. that prediction it. was we up. was my here, -- the it's We another the yet. haven't So around repetitive drop very I'd backlog a so from drop, were only that backlog it's turned is -- you bit not improving. much of I kind was that this orders of drop level about I'm

Our production level quarters. two was pretty steady the last

trend continue. that need just to we So

the hopefully starting that four-day I local level again, think stabilize, our with a schedule. supports to great. return take trajectory and us where to hopefully up first start basis we'll And right be see plants back which on then it's backlogs build schedule a full to to on would

that So trying -- I'm as our to much on, trends we're you're That's going get keep going those to be looking up. to we're that a utilization to make forward saying. time prediction not we the eye back as an and are

Daniel Moore

Understood. Maybe…

Bill Boor

about asked You as well, pricing Dan?

Daniel Moore

Yep.

Bill Boor

well and in You asked good right? as that's think has. holding demand price about and well, very the it supports, related, balance pricing industry as I discipline If shown the supply has as

If industry. the stabilize a need direction to So that would is disrupt happens all to backlogs we for as something those then always and then and in think start demand, prices. support this it turning I it's real risk is

Daniel Moore

a of Understood. Helpful. jump with it I will back follow-ups, turn you. Thank but couple over.

Bill Boor

Dan. Thanks,

Operator

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

is line Your open.

Greg Palm

terms basis? couple you Maybe for are exactly were remind quantify on maybe and whether magnitude a seeing what rates, seeing what you taking Are you specifically, of thanks Are Hey, on kind Dan's. what what kind or that's are terms sequential then questions. us starting seasonality up maybe a you seeing of then you're off better? you just following a in of normal in in worse? order kind the -- seeing of seeing is year-over-year of just quarter? same Can Are you order year? seeing normal in of of rates And you of July? what sort the And

Bill Boor

at numbers. looking can I'll to anything, I other I folks you this and ask if give get take some I'm off or then And Yeah, here. correct, a stab few the data

basis, about historically And which same about done XX% XX%. not we were we're numbers in year-over-year haven't a Solitaire same the on plant But We orders. a on is quarter-to-quarter, up this, these acquisition. up basis, what's included basically on but plant

last drop cancellations jumps. we to were period year, a Last we year I'm right starting orders pretty are I the think about where see in in now So this, -- big off.

And really instructive I focus me There's your both. So Greg, to the think the sequential. remind part second could it's on more of data you on question?

Greg Palm

a may mean of what the just be are rates? you of terms What I us anything Yeah. is if typical I can normal to year kind quarter? in seasonality that guess -- And remind on order terms of July orders? in specifically you for seeing then different relative in

Bill Boor

Yeah. The just kind shared. different I last coming wouldn't -- I continuation of off anything in quarter the of July the note information

note to there. of drop into as when of December and if seasonally timeframe is to way you you as kind then off and tends We've too simplistic, So after take this things at of late higher, the the And considerably is calendar March of this if the be the through year, year nothing get seasonality seasonality. October, interesting. the think I at looked going November, looked but year kind and you early far part October that be

get you, got far and on bigger things of shifts in the But a the -- drop be seasonal rate drivers sometimes can interest shifting macroeconomic in as least. folks But adjustments we through should perspective, going lot be we like at on aspect where to have, you've -- off seasonal We things tell the in we're a from the hitting zone seasonally. where expect some I'll by period kind we'd years not as dwarfed like confidence, of good should that. October, a that

Greg Palm

Yeah, okay.

don't crystal know you end a on give information we is I of orders on the expect the of more to year-end what or I your when know ball based but was commentary some think point think year, less the see -- timing, perfect, the all finer the is terms maybe you little your the community not was said you In by but And today? visibility? bit on can how us if or orders, towards know and it on I just

Bill Boor

about was way my like asking externally, and I something kind be statement thanks through the Yes, think only just internally that acknowledging because feels next it’s of we that talked this is of feeling as I you're couple is in for to that question. the worked will everyone Well, Yeah. quarters. perfect not

I didn't that's on-off things always say I that really they switch. happen don't These don't it. pinpoint know. a So why like I happen. don't

in to it feeling of “back we'll problem during should able see the, they our they're that hopefully, of period. worked defining meaning because end be even this kind talking to hey, year, the normal," we REIT the be I'm But inventory of ease So by like, is an through. the to big customers, have kind

with analogous little to through bit it's schedule. to the and seem little on So time different the just what be a we went a communities dealers

pinpoint So months. can't I by it

Greg Palm

Yeah. just that order in mean take But of -- ordering is until units start then to taking by so clear, does to year? they expectation more it's they sort start of ready units actually set and delivery they be another or months Or your is handful that the they're that them of the the end weeks up? advance, and

Bill Boor

an have Yeah. That's expect if that are our we'll do expect -- kind keep fine-tuning. We we we in we'll that expectation, that frame. time short. backlogs of see see orders mind, And do pretty in

of shipments into this that orders our quick know backlogs customers pretty turn when So are short. all

an So it with regard, time. have should sort which that, make thing pretty done. backlog, be they production -- in putting of is this in just in for the They good means really a getting it we're for delivery an assumption should ordering that we and into be won't when be this order, it But future. a it

the to strengthening saying, I that is, the think we're question dealers yes, long-winded support from way communities trends street your answer we're now. order seeing right we'll have of anyway, to So hoping

Greg Palm

services. visibility quarter mentioned of a this around think feel sort of claims you you that well? the you any quarter in impact kind you do Do whether was have financial sort one Or of as like question just that -- increased last on Do And have thing? I Understood. margins. might

Bill Boor

Yeah.

approve business the that for weather. to premium little And the it's we premium had which But good their it our increases. process that's claims. You real business, costs operating doing right, -- that just kick a time expected to. in. insurance to high know run get company as Everything are takes feel their premium is whole appropriate to is to are They increases states they getting they're about, increases,

And of storms, a catastrophic, reinsurance into so levels. the view, in my were so of number we didn't had none which they get

of think the kind necessarily no outlook, And continuation that there's a on to rest storm to reason the for year. of of near-term events the correlates

of just good done to of insurance is of kind sure to there's periodically but kind little a bit isolated, hit us looking rash I'm don't it's and real as was a storms. that time, return a forward and the going any expect a making quarter clear a if answer, that So from they've with company. perspective, that But of game continuation. as can of we're far Over planning economically that nature not a reason the forward, an well past for profits. I see getting get

Greg Palm

Yeah.

Okay.

thanks right, All the good. questions. for Sounds

Bill Boor

Greg. Thanks,

Operator

Our next from -- comes [Operator Instructions] with Canless Jay McCanless, question Wedbush.

is open. line Your

Jay McCanless

Good morning, taking Thanks everyone. for my questions.

also about on are to talk Cavco's we've congrats. saw lumber in then pricing flexible just you to that the of industry. up, starting do side their the now unit I prices decline work the half on shipments. better Bill, So to through? we to be you had up guys flow price way going the tightening higher in guess on industry And eventuality lumber could of the to start prices that been decline that, than you've have seen flip about was XX%, XX% how

Bill Boor

we've pricing. that's really I share through Yeah, the any pricing, aggressive think don't we've being gained case. believe or I through don't -- maintained really think I on market don't more

the of what's Just the and dealers, to with part, every like as calls looking of we're sensing we're to they to have go plants, month, in their And our for with do right their of the own customers, other feel them we we when they're manufacturers. them right and through talk talking touch constant all priced most kind in market. focus kind

with we that got really good -- to our think I'd like relationships dealers. So I think we've

talk doing question it obvious is pricing. strength but us any about for and driven by I that independents think our We think lumber with think I always from I charge time. of it's a and don't bit But the comes of is to them, for that on coming last homes little the partly now, The pays supply way gross by off there up. the disassociated cost. and the but by job of attribute kind about an margins And good our focusing over it us also an partly said years and for industry, It's those costs, price. as price a I've that we demand our homes. driven couple well driven the been I as

So of I don't kind OSB of competitive markets. given sense. all that -- we correlating not it local in believe looking I in and kind the going of those I necessarily We'll way demand pricing guess, that's supply prices, where sure we're from a that standpoint to I'm if of at and now, and saying are be lumber be the of more position makes our homes uptick

Jay McCanless

Sure. about quarter Makes are last sense. Could rates where versus you year? last and maybe talk now mortgage chattel

Mark Fusler

Mark. is this Jay, Yeah,

that take can I one. So

been pretty consistent sequentially. they've So

they're now, about X.XX% to still right So about X.X%.

Jay McCanless

you other Sounds first then, the Maybe good. question general to thinking again maybe about that. Could on more the about new you it had, I stock just floor whether just plan guess, expand make the talk allocation, And does capital repurchase or some authorization. side? do sense thoughts I about

Allison Aden

Yeah, that. James, let me help with

have our $XXX gave been million $XX a in another authorization. diligent ago repurchase first step think the back, our I very since authorization, Board million. years us couple we previous authorizations, a on take of was if do just using And and which we've you the

We quarters available buybacks when do had stock are a that that balance as the didn't to these and creates use in quarter. the that something in a management variety maybe We've upon. repurchase we really when us we past we of as much to a markets recognize the see and -- too execute given aren’t So plan in there's we to remains sheet market attention tool in considerations. this

wouldn't the managing the weren’t operations are except read center strategic price We're making manufactured the position we're I these into about generally balance the around fact really And evaluation any speculating stock and priorities, not operations we're decisions. we down make when of conservative of information. in expansion market and too And invest plant lending much to our sure we which ongoing opportunities that non-public say our sheet are we right and of of housing. still that that

just So taken our on focus responsible to using a stock a sheet. just balance continued as way manage as whole, it's buybacks the

Jay McCanless

it. God

That’s thanks. all I had. Okay,

Operator

this Thank to you. session. line would Bill, is remarks. Bill At sure CEO, back the make turn concludes it I President muted. like time, to your question-and-answer Boor, please closing That not and for

Bill Boor

offers the the only ready inevitable in market puts up moment demand position our I near-term our you, operating still take the be Thank organization to while reduced with at and when can orders, continues to the providing to was. of need -- prospective underlying occurs. valuable it our with efficiently. economic demand schedules that. to The great Despite tools us drivers our And release and our are problem increasing. production of and plants for what our sheet, we're affordability sales, in drive is strong And retail And balance and apologize generation worsen. and marketing homebuyers continues digital to proactively a advances. retailers our lead all housing this, ramp slow combined

I that, you, in our to on with So interest your want always, we keeping to updated thank as progress. you Cavco, for look and forward

Operator

your conclude Thank in the conference. does program. today's This you participation for

disconnect. now may You

Cavco Industries (CVCO) 4 Aug 232024 Q1 Earnings call transcript