Q4 2021 Cavco Industries Inc Earnings Call
Good day, and thank you for standing by welcome to the fourth quarter and fiscal year 2 start from signing 1 gasco.
Casco Industries, Inc earnings call that cast at this time all participants are in a listen only mode. Later, we'll conduct the question and answer session and instructions will follow at that time, if anyone should require assistance. During the conference. Please press star zero on you touched on the telephone I would now like to turn the conference over to your host Mr. Mark Fosler.
The director of financial reporting and Investor Relations. Please go ahead.
Good day, and thank you for joining us for chemical industries fourth quarter and fiscal year 'twenty 'twenty 1 earnings conference call. During this call you'll be hearing from Bill Boor, President and Chief Executive Officer, All Big the Chief Accounting Officer and myself before.
Before we begin we'd like to remind you that comments made during this conference call by management may contain forward looking statements under the provisions of the private Securities Litigation Reform Act of 1995, including statements of expectations or assumptions about Captisol financial and operational performance revenues earnings per share cash flow or use cash.
Savings operational efficiencies current or future volatility in the credit markets or future market conditions.
All forward looking statements involve risks and uncertainties, which could affect cash flow as actual results and could cause its actual results to differ materially from those expressed any forward looking statements made by or on behalf of capital Inc.
I encourage you to review of catalyst filings with the Securities and Exchange Commission, including without limitation. The company's most recent forms 10-K, and 10-Q, which identify specific factors that may cause actual results or events to differ materially from those described in the forward looking statements.
Some factors that may affect cap goes the results include but are not limited to the impact of local or national emergencies, including the COVID-19 pandemic.
Such impacts from state and federal regulatory action that restricts our ability to operate our business in the ordinary course, and the impacts on customer demand and the availability of financing for our products.
Our supply chain and the build the availability of raw materials for the manufacture of our products the avail.
The ability of labor and the health and safety of our work force.
On liquidity and access to the capital markets the <unk>.
<unk> of litigation of regulatory action potential.
Potential reputational damage the cap call may suffer as a result of matters under inquiry.
Adverse industry conditions, our involvement in vertically integrate the lines of business include the manufactured housing consumer finance commercial finance and insurance.
The forces on housing demand fluctuations.
Our business on operations being concentrated in certain geographic regions loss of any of our executive officers additional federal government shutdowns and regulatory regulations affecting manufactured housing.
This conference call also contains time sensitive information that is only accurate as of the date of the slide broadcast Thursday may 7.2021.
<unk> undertakes no obligation to revise or update any forward looking statement, whether written or oral to reflect events or circumstances. After the date of this conference call, except as required by law.
Now I'd like to turn the call over to Bill Boor, President and Chief Executive Officer.
Welcome and thank you for joining us today to review our results for the fourth quarter and fiscal year.
Reflecting on the year I went back the last year's call by the time, we reported in May of last year, we were starting to see some positive demand signs.
However, the magnitude of the pandemic was increasingly apparent and it was an incredibly uncertain time.
GAAP co we were already well into the process of implementing policies and approaches to support our employees while safely keeping all of our operations open to support our customers.
Nobody could have guessed it what was the head and we said on the call the projections and predictions were meaningless.
We say clear principles for the path forward and we remain flexible.
We now know that we were in the early stages of a long and very challenging year.
To be reporting our 11th straight year of increased revenue on our operating earnings with that backdrop is remarkable and it can only be attributed to the people at Casco, who persevered and remains extremely committed.
That's true for the year and has been demonstrated again in the fourth quarter, when the Texas freeze and power outages impacted people across all of our operations.
Again, they found ways to quickly open back up even while dealing with their personal challenges due to the unprecedented weather events.
Business results speak for themselves.
We are only possible through extraordinary and very capable effort.
Focusing on a few of the results we recorded the highest quarterly net revenue on our history.
Our manufacturing utilization was approximately 75% well that's lower than before the pandemic and little constellation given the rapidly growing backlog is very good progress in light of persistent labor and supply challenges that have not let up.
At times during the quarter utilization did reach 80% despite significantly less hours worked and the supply inefficiencies we've discussed before.
Backlogs were up again, this quarter growing $131 million of the $603 million.
That equates to approximately 32 to 34 weeks.
But we need to keep pushing to produce more interest in the extraordinary order rates that are driving the backlogs.
Order rates were up 50% over last year's fourth quarter and 40% for the year.
These incremental orders account for about 85% of the backlog growth this year.
Okay.
After a dip in force product costs in October and November, which favorably impacted our fourth quarter margin supply costs escalated rapidly.
For example oriented Strand board was up 275% over the past year and 48% from the start to the end of the fourth quarter.
As we've worked to increase inventories where possible to address supply risk. We expect the lag in our manufacturing margins where by cost of goods sold will continue to drift up.
Even after spot markets, hopefully peak and decline.
The bottom line here is that I feel we've done a good job keeping up with input costs and I expect gross margins will be moving around a bit from quarter to quarter due to this lag on material costs hitting cost of goods sold and the wild changes in input costs that we've seen.
Our retail operations continue to perform very well like other MH retailers, if they could get more homes they can sell them.
They've done a great job adjusting to the dynamics of the past year, which has been an emphasis on <unk> and fone ups during the bulk of the year when walk ins were down.
It's been a consistent story of higher conversion rates, which means people are out of the buying not just shop.
Traffic and sales continue to follow a seasonal pattern, but at a significantly higher level than in recent years.
Regarding the financial services I want the specifically recognize the outstanding job done by our people at standard casually, who responded remarkably to the February Texas trees.
She was in their customers' time of need just tremendous commitment and of meeting huge difference for many impacted homeowners.
Claims from that event exceeded our reinsurance limit of $2 million.
Despite this financial services had a strong quarter and year with gross profit up 84% and 12% respectively.
As Paul will explain the quarterly comparison was the last year's period, when we had some country place mortgage valuation adjustments and loan loss assumption changes, resulting from the late March market disruption.
Regardless of performance in both lending and insurance was strong.
And the broader housing picture of the homebuilding industry is the only touching the level of the new unit starts needed the balance household formations with supply and labor constraints, the country's pent up demand for units from a decade of under building does not yet being worked down.
While we know there will be cycles, driven by interest rates on other macroeconomic drivers there is of tremendous need for more of affordable housing.
Beyond the past year's challenges on our needs of focus on delivering strong results. We stayed focused on the long term as well our strategy of investing in our plants seeking acquisitions in new growth opportunities and investing in our people is not caused by the pandemic as 1 example, during the quarter, we announced the purchase and.
Element of the New Park model facility in Glendale, Arizona, the will increase capacity per park model customers and also increase our HUD capacity because it frees up the second line on our Goodyear plant.
That project is on schedule to open later this year.
We're investing in improvements to our plants, the will increase productivity and improve the workplace for our coworkers and we are committing ourselves to training and career programs that will pay off in retention and skill of improvement.
These are the fundamentals that will enable caf code of produce more homes and have a bigger impact on affordable housing.
With that I'll turn it over to Paul to discuss the financial results in more detail.
Thanks, Bill and good afternoon, everyone.
I'm going to go through the operating results and then I'll turn it over the Mark to walk through the balance sheet changes.
So as Bill mentioned net revenue for the fourth quarter of 2021 and was the highest quarterly revenue on the company's history.
We ended up at $306.5 million, which is up 21% compared to $255.3 million during the prior year's fourth fiscal quarter.
Within the factory built housing segment net.
Revenue increased 19, 6% the $288 million from $248 million on the prior year quarter.
The increase was primarily due to a 13.13, 8% increase in average revenue per home sold primarily from product pricing increases and the product mixed.
<unk> to slightly more multi section homes, both of which contributed approximately $27.7 million of additional net revenue.
Units sold increased 5.2%, which contributed approximately $19.1 million.
On the production continues to improve the factory utilization for Q4 of 2021 coming on at approximately 75%.
However, we do still continue to face challenges with inefficiencies from unpredictable factory employee absenteeism hiring challenges on building material supplier shortages.
The financial services segment net revenue increased 26, 7% $18.5 million from $14.6 million per mill due to $1.1 million of market gains on equity securities compared to $2.3 million in losses in the prior year quarter.
Additionally, the impact of having more insurance policies in force compared to the prior year quarter was partially offset by a reduction of interest income from the formerly of securitized loan portfolios of continue to amortize within expected levels.
Consolidated gross profit in the fourth quarter as a percentage of net revenue was 23, 1%.
Up from 23% on the same period last year increase was primarily the result of the factory built housing segment, increasing the $26 million in Q4 of 2021 versus 19 point the.
Zero percent in Q4 of 2020.
Most factories had been implementing product price increases at the rate greater than the income input cost increases, resulting in higher total gross margin dollars per home of expanding the gross margin percentage.
In addition, some incremental margin was provided by expensing of raw materials purchased at a relatively lower market price at the beginning of the quarter before times of rapid increases given our first in first out inventory accounting policy.
This means the margin from the early part of the quarter were better than the latter part of it.
Improved gross margins on a percentage of revenue in financial services was 61, 9% up from 40% to 70% on the same period last year, primarily due to the the result of higher unrealized gains on marketable equity securities and the beneficial non cash valuation adjustments of prior year included $2.1 million of.
Non cash valuation adjustment charges, including the loan loss reserves from economic conditions stemming from the pandemic, while the current period Hasnt benefit from the same items of $7 million.
These benefits were partially offset by higher weather related claims from the <unk>.
Deep freeze on occurred in Texas in February of 2021.
Selling general and administrative expenses in the fiscal 'twenty 'twenty, 1 fourth quarter was $44 million of 14, 3% of net revenue compared to $37.4 million or 14, 7% of net revenue during the same quarter last year.
The cost increases on work from higher salary and incentive compensation expense on improved results.
Increased charges related to paying off time policy.
At vacation enhancements and several of the severance expense of $1.3 million of related to the separation from the company's formal chief financial officer the.
The fourth quarter also included a $1.4 million in expenses related to the FTC Inquiry, Inc.
Clearly the related accrual for the potential outcome of the inquiry.
There are really 3 main drivers of the reported of FCC number.
1 lawyer fees to insurance recoveries and now on this accrual.
I also want to remind you that in the previous period included $2.1 million of D&O insurance premium amortization with no expense in the current quarter.
Other income this quarter was $3 million compared to a net expense of 631000 in the prior quarter.
The current quarter includes unrealized gains of $2.1 million on corporate equity investments compared to unrealized losses of $2.1 million in the prior year quarter.
The increase partially offset price point 6 million reductions in interest income earned on cash and commercial loan receivables.
Louis and lower interest rates.
Pretax profit was up 118, 4% this quarter compared to 29 of $29.7 million from.
From $13.6 million from the prior year period.
Second income tax rate was 15, 2.2 per cent for the fourth quarter compared to 12% of the same period last year.
Higher effective tax rate in the current your current relates to higher income, partially offset by greater tax benefits from stock.
Mark option exercises.
Net income was up 110% to $25.2 million compared the net income of 12 million of the same quarter of the prior year.
Net income per diluted share of this quarter was.
The $2.71, compared to the dollar and 49 cents and last year's fourth quarter.
Now I'll turn it over to Mark to go through the balance sheet changes. Thanks, Paul So comparing the April 3rd 'twenty 'twenty, 1 balance sheets of the March 28, 2020 balance sheet. The cash balance was $322.3 million up from $241.8 million a year earlier increase was primarily due to the 4 items which include net.
Net income offset by noncash unrealized gains on equity investments and other noncash items changes in working capital, including greater accrued expenses and other current liability balances which include higher customer deposits received as a result of higher order rates.
<unk> collection on consumer loans, and then sales of consumer loans greater than loan originations. These.
These were offset by purchases of property plant and equipment, including the purchase of the Glendale, Arizona Park model facility.
The inventory purchases and repurchases of our common stock.
Investments increased from the recovery of the underlying equity markets during the period.
Inventories increased due to rising prices of raw materials used the production pre.
Paid on other assets was higher from the assets recorded in regards to the loan repurchase option for delinquent loans that had been sold the Ginnie Mae.
While we are not obligated to repurchases loans accounting guidance requires us to record an asset and liability for the potential of the repurchase.
The balance included increased from additional loans in forbearance offset by routine amortization of prepaid balances, including the additional D&O premiums.
Long term consumer loans receivable decrease from principal collections on loans held for investments that were previously securitized.
Operating lease right of use assets and the related liabilities increased from a 5 year lease renewal of our Goodyear manufacturing facility.
Accrued expenses and other current liabilities increased from deferred payroll tax payments under the cares Act on.
Our customer deposits, which have grown with the factory backlogs as well as the delinquent loan repurchase option previously discussed.
Lastly, stockholders equity was approximately $683.6 million as of April 3.2021 of.
$76 million from $607.6 million as of March 28, 2020.
And the balance sheet includes the new Treasury stock line item, representing the cost of a repurchase <unk> shares during the period.
Now I'll turn it back to bill.
Thank you Martin.
I wanted to follow up on Paul's comments about the SEC cost and the related accrual.
I know that given the very long time, the situation's been unfolding there.
There's likely to be a lot of interest in this.
Well appreciate the given that the amount is financially immaterial to our overall results in net it pertains to a desired settlement with the SEC.
Not separately identifying the accrual amount.
Also on a clearly say that our decision to accrue does not indicate any change in our view of of possible settlement, which remains uncertain.
I understand the slightly raises the question why did you accrue now.
This is of process and 1 of the SEC controls and drives as part of their process. We saw fit to formalize the settlement proposal and from an accounting perspective. This triggered the need for an accrual.
You should not interpret this to mean that of settlement is eminent.
Also want to caution that legal fees and potentially other costs are likely to continue.
While I recognize this is news for reasons that I hope you'll appreciate we arent in a position of say more about it at this time.
With that great. So, let's turn it over for questions.
Secondly, ladies and gentlemen, if you have a question at this time. Please press Star then the number 1 key on your thoughts on the telephone.
That will be stardom of the number 1 on you touched on the telephone.
Yeah.
Your first question comes from the line of Daniel Moore from CJS asked your line is up on them.
Good morning.
Good afternoon, I should say our time, thanks for taking the questions.
Just a quick housekeeping to start how much revenue and gross margin benefit did you see in the quarter from the additional week kind of year over year.
Is that of that number.
All of them on that.
We can certainly estimate if you had it.
And we can get it off line, it's not at the.
Not that difficult to give me the SEC.
We can come back to the car will come back to advanced.
Sure.
So a lot of detail on the prepared remarks bill greatly appreciate it a lot of moving parts of the business what are your expectations for shipments in fiscal Q1 relative to Q4.
You know and you know and should we think about the levels of the potential shipments as we look out to Q2 and Q3.
You know given the supply chain constraints that are well documented in.
And I'm, particularly around PVC and <unk>.
Siding and the it.
Disruptions from the golf et cetera, so any commentary on how we should think about the cadence of shipments going forward would be helpful.
Yeah model continue to be interesting I mean, the supply situation.
Really is not.
Excuse me has not let up.
So we're not really.
Seeing any less supply disruption than we have in previous quarters. So that risk remains kind of unchanged for the most part of it hasn't caused our plans to shut down we've had some very isolated situations, where we've lost the day or so.
<unk> talked before that causes.
And the efficiency rather than necessarily shut down or has so far.
So anything that we kind of anticipate as kind of as as that risk overhanging. It continues to be the case.
Well, we're going to try to do is what we've been doing which is continue to work on capacity utilization of what.
What we've seen I told you that we were at 75%.
Over the course of the fourth quarter.
Our interim goal is to get back to where we were pre pandemic, which is in the 80% range and I think thats achievable.
That we got to the 75% on even spent periods of time in the quarter at 80%. Despite less production of employee hours. So I feel like we're doing a good job from the throughput.
Perspective from an efficiency perspective, we just have to get the numbers, let's say, 80%. So I know I'm not giving you of anything specific demand certainly isn't the question. The question is can we get the labor hours up and can we get can we continue to maneuver through the supply issues.
So.
That's kind of how we're looking at it and don't really have a specific projection for ya.
Okay. It doesn't sound like you expect you know daily or weekly production to step back at least on what Youre seeing today.
Materially it's just a function of how quickly we can improve it is that a fair assessment at least yeah that'd be right I noted all of our all of our of Okay. All of our focus on manufacturing is just.
Get as much throughput as we can open that we can turn the tide on this.
As unhealthy backlog the none of us wanted it to be that high.
Okay.
Are you seeing incremental demand coming from trading down versus site built, particularly given the rising raw material inflation.
Anecdotal or other evidence there.
Yes, I only have anecdotal on maybe even just what we believe to be happening from a logic perspective, we talked in the past.
As much as we're struggling with.
The efficiency in supply, we're more efficient with labor and materials than site builders. So in a way the playing field for MH just keeps growing upward.
So and then you've got the.
The rapid increase in housing costs that everyone has heard about in the following so all of that indicates that there's got to be some segment debt and different times, we'd be looking at site built but now we're kind of in the zone of the higher end of of our business. So I believe that's happening I don't have a lot.
Of that at a point too.
The flip side of that and you didn't really asked the standard the flip side of that.
Is.
And concerned about the fact that the folks at the lower end debt in normal times would have been qualifying for.
Getting into a home and then MA channel and they are kind of getting priced out of the market right. Now so that deficit of supply is just getting worse.
Understood.
That's helpful and.
Labor availability and absenteeism.
Are you seeing any improvements as the pandemic recedes.
Just kind of too early to tell.
Yeah, it's kind of balance sheet every time, we get a little optimistic because we have a good week of net hiring than we get it.
Net humbled the next week I guess.
So.
I think we're heading in the right direction I think some of that.
I am hopeful that the coming months some of that's going to just be an.
An improvement on a general economy perspective, as far as people going back to work and looking for jobs.
I think the some of it's attributable to some of the things we're doing to try to.
The dress opportunities for our workplace and our wages were doing a lot of things here that I think are making a difference so.
I'm optimistic about getting through that debt.
The hiring difficulties that we're facing.
Got it and lastly, and I'll jump back but.
The exciting just kind of hear about the our C of the development of the New Park model facility takes place.
What other are there other geographies that you've got targeted for potential Greenfields, where maybe you can open the plant and then you know.
The increased capacity not only at the new plant, but the alleviate a little bit of stress on some existing ones.
Or is it what do you sort of wait and see how this goes first and then go from there.
Yes, we don't really want to wait and see I mean, we want to be relatively aggressive about investing because.
Our view is we've talked in past in the past is very.
The confidante as far as demand going forward so.
We're not sitting on our hands the challenges with new capacity.
Obviously, it doesn't happen overnight. She has got to have the confidence in demand, which we do but the challenges are the same challenges that face us in our existing operations and you get the labor.
Can you get the supplies and.
In a situation, where some suppliers are being allocated right now.
And and the classic challenge in MH also is.
How are you going to get kind of the shelf space the access the market because most places are.
Already served.
No.
We've always said that we've got of real interest in the.
The next frontier for Us geographically, which is the northeast just geographically.
And we're working hard to figure out how we can.
And grow our shipments so whether that's acquisition or more greenfield.
Have to see how it unfolds.
Very good I'll jump to the hand, it over and jump back with any follow ups. Thanks.
Thank you.
Thank you on your next question comes from the line of Greg Palm from Craig Hallum Capital. Your line is open.
Yeah great.
Thanks for taking the questions here I wanted to start off with just back to the demand environment curious what trends have been like in April and May and I guess any noticeable difference between retail and community channel calendar year to date.
I'll take the second part first it's kind of the short answer there both go on strong.
I know early on in the.
On the fiscal year of when the pandemic was getting underway.
Communities kind of took a step back.
Kind of more of a wait and see attitude in the the street dealer business just.
It took off.
I'd say to day, both are very strong hard to separate them.
Yes.
It was the first part of the demand as far as regional is that what you're asking no I was just.
The current quarter to date, what Youre seeing in terms of trends April may of whether anything's changed since what you saw on <unk>.
In your in your fiscal Q4.
Generally continue to be very strong.
1 of the things and this might be a little more information that I need the throw out there that you're interested in 1 of the things. We've started doing is keeping a really close eye on quotes as the leading indicator of demand and generally I can just tell you that they remain very strong the theory being that there should be a correlation between quote store.
The 2 our manufacturing plants and the ultimate orders.
And from that expenses.
We just don't see any letting up right now.
Obviously, the same things would be the the turning points. If we see a significant increase in rates that will change the tide.
But right now there's just no reason not to be pretty optimistic about continued strong demand.
Yeah makes sense.
I was bit surprised the asps were flat quarter over quarter I know, it's still a big jump on a year over year basis.
You called out mix shift a bit more towards multi I I don't know if that comment was specific to the year ago period or sequentially, but.
I guess, what's what would be the reason that asp's won't continue to go up but is that your expectation as you've continued to take up price in here in recent months.
Yes, it's a little different answers for the sequential quarter to quarter and the year Mark you answered yes. So this is mark yeah, we had.
Comment that you mentioned was related to Q4 over Q4 year over year. So sequentially, we did actually see a little bit of the mix shift towards more single section homes.
So that was offset by increased prices on kind of the multi section. So some kind of on net net flat like you mentioned.
If so excluding any potential mix shift going forward is it still safe to assume that like kind of like for like basis home prices are still going up I mean, I think you've been taken price increases even even more recently correct.
Yes that process just continued share I mean.
As Paul talked about the.
The input costs.
Really shot up during the quarter. So we're doing our best to kind of keep up with that.
And we tried to explain the dynamics that we see with margins and the fact that there is a lag between the current pricing of input costs and what flows through our cost of goods. So it's on.
On the keep an eye on I think.
As I said, we're going to probably see some the balance sheet percent margins.
Yeah, and I guess that was going to be my last 1 because you know we obviously have the blended rate for the quarter in terms of the gross margin, but you had mentioned that it sounded like it was higher than that at the beginning and the lower than that at the end can you at least sort of quantify maybe the the gross margin rate.
Exceeding the quarter I don't know if it was if it was lower by 100 basis points or of 150 basis points and I'm, specifically asking about the factory built side, but I'm not sure. If that's what if you can quantify that specifically or not.
I don't think we of the quantification, but just to get a little more background on that and we looked at the rate of materials per floor in October and there was really a debt between the end of September and then the differently started on October and contained all the way through November end of most of the December and so as the.
The costs or purchased as raw materials. Those then became cost of sales of ore expense and primarily January and February which is why we had on increased margin.
And in the earlier part of the quarter.
Have the specific amount of debt but.
Just in general that the.
Cost per floor with.
Roughly 20% less than those that October and November periods than what we had another periods.
Lumber and OSB.
Sure Okay.
Alright, great well all of them.
I'll leave it there thanks.
Okay. Thank you.
Thank you your next up we have Jay Mccanless from Wedbush. Your line is open.
Hey, just to ask 1 more question on that.
Should should we think normally that theres going to be kind of the 2 month lag where you buy raw materials and it takes about 2 months for them to go into a home or is that lag shorter right now as you all are trying to ramp utilization.
I think it's a pretty good rule of thumb the be honest because you're right. We're trying to ramp utilization, but we're also trying to make sure we get the materials, it's not only the price, but it's the physical availability. So we're not we're not trying to run at a very lean inventory.
Right now in this environment, we're trying to make sure that we've got everything we can get so.
I think that Thats, probably I'm looking at Paul I think that's probably a pretty good rule of thumb 2 month lag, yes that makes sense and what the.
Good for them and the change in ramping up production of the factories of very keen on making sure they have enough product to contain the build.
Okay great.
And then.
Understand that you don't want to comment much on the FCC investigation, but I got a little lost Bill. When you were discussing why you needed to take the reserve this quarter could you go through that again please.
Yeah, that's fair enough.
I'd love to talk about everything and we don't want them to.
Talk about it when we can say, it's all wrapped up.
Yes basically in.
In the process.
Of.
We said all along we're hopeful for a settlement right and in the process of working with the SEC of this past quarter, we kind of.
Formalized the.
The settlement proposal to them and when we did debt.
The.
That made it appropriate from an accounting perspective to the book on accrual.
And that's the kind of it I mean, that's the news really so I think the difference from the previous quarter was there are discussions going on but there was really nothing formalized that had been ratified by the our board. It was similar he is just discussions between the junior member of the efficacy and our external counsel.
So the formalization happened in Q4.
Okay, great no that makes more sense. Thank you.
And then I guess the the other question I had is.
You talked about low end consumers potentially getting priced out low and the MH consumers.
Do you guys have any sense of how much of your market is it 5% of the Tam 10% I mean, how much do you guys think has been priced out on the lower end buyer.
Yes, it's kind of a tough question because we still have such high demand. So we're not we're not seeing.
The demand impact from that I'm, just kind of reflecting on what's obviously going on on the market and the fact that.
The the country's got the affordable housing issue I believe that's the low end of the market issue and that part of the market. It just got a lot harder by the houses so Ajay I don't really have a quantification of it.
Just I think that.
We believe that there is a huge general pent up demand for housing.
It's disproportionately growing at that low end.
Yeah understood. Okay. Thanks for taking my questions.
Thanks Jay.
Thank you. Our next question comes from the line of Ian <unk> from Gabelli funds. Your line is open.
Hi, Bill first congratulations.
The 11 straight years of growth in revenues and earnings and obviously this year during a pandemic debt.
Very nicely.
Yeah. Thank you very much of.
A few questions on financial services, if I could I guess, starting with the standard chartered how significant.
What is the excess of claims above the retention limit.
And.
Did did this event.
The Texas freeze has that resulted in higher pricing either for your primary insurers or from from your reinsurers.
And also any impact on demand for insurance.
Yes on the pricing impacts really isn't apparent if theres going to be 1.
The kind of happens periodically on.
On both our rates as well as reinsurance rates. So there is no apparent impact from from that perspective.
It was an interesting event because it was characterized by.
A whole lot of relative relative to for example of hurricane a whole lot of smaller dollar number of claims.
There were a lot of them. So it did go over the 2 million.
I don't know.
I don't think we have any.
Statement about how much over 2 million of wine.
It was it was the magnitude of some of the name of Hurricanes that we've had in the past though on this.
The big issue.
Okay.
And then on the commercial lending operations I know initially.
This was.
You got into the business to fill a void.
Left at the National lenders exited.
Have have large lenders come back to of floor plan financing for retailers.
And do you still view this as sort of an area of of attractive growth.
Presumably independent retailers will be adding stores given the strong demand.
Yeah, I mean, there's there's availability for floor plan lending out there we continue to do the you're absolutely right. The initial thrust of that years ago was because so many big lenders exited the market.
We're kind of.
Comfortable with how we manage it and we do think it's important for some of our relationship with independent dealers. So it's not something we look to necessarily grow aggressively from the profit perspective, we use it as kind of the.
Way to support those independent dealers and the level has been relatively stable over time.
Okay, and lastly for country of place to any updates on the.
The chattel lending.
Operations and any expansion there.
Yes.
We still think it's the.
It's an opportunity.
We've from.
We've seen some success in the market with some securitization that people of probably heard about so that's encouraging.
And.
We think we're we think we're pretty.
So when we think we're doing a good job of dependent on pricing the risk of chattel lending.
We've talked during the past year of the rates really were pushed down surprisingly at least for me it was surprising.
But during the pandemic there was kind of a step change down in rates for chattel lending.
But even with that we're looking at it as something that we might commit more balance sheet too overtime.
Okay. Thank you.
Thanks Ian.
Thank you your next up we have bill Wolfenden from cotton with the investments. Your line is open from.
Good morning, a couple of questions. Please you guys announced the share buyback of couple of quarters ago. It looks like you bought all of Opex 6000 shares.
We're getting the it looks like over $375 million of cash and investments on the balance sheet. So could you just discuss your capital allocation priorities looking out over the next few years. Please.
Yeah, the small amount of buybacks.
The most regrettable on this quarter, just because it kind of it.
It wasn't that significant but we got going.
So we still see that as an important tool to trying to manage the cash balance going forward.
I've said before we recognize we've got it.
Manage that cash and we are.
Frankly kind of surprises from the early days of this last fiscal year.
Both cash flow and we did just because you've started the year. We didn't know what was going to transpire. So.
They can add a little bit of a pause to see what happened with the pandemic and we just kind of accelerated the issue.
As far as priorities.
We are investing in our plants and we're investing in some organic growth as you've seen with the.
Glendale, Arizona facility that we're working on net cash was there was the big use of cash this quarter for that.
We are continuing to be in the market for acquisitions and I hope that we'll be able to do something there.
But based on <unk> question I talked it we're willing to use some capital for chattel lending as long as the risk rewards right for us.
So the priority is kind of remain the same and we know we got to get some cash puts the work here.
So based on those comments you anticipate the buyback potentially picks up then looking forward as we sort of get through the pandemic in terms of the FCC issue in interest.
It seems like if you are buying your own share as might be more beneficial on earning zero on cash.
Yes, I mean, we got the authorization of intended use it to try to help manage the cash flow. So.
That still is the case now.
Great and then just a housekeeping.
The question can you elaborate on on exactly what the non marketable equity investments.
<unk>.
Yes, those of our joint venture in retail operation.
The we partially on.
Okay, Great and then.
Has there been any new proposals that we may have missed from the new administration in Washington that could potentially benefit the manufactured housing industry.
Yeah, nothing that I would really say is noteworthy on the call here now.
Thank you.
Alright. Thanks.
Thank you on behalf of follow up question from Daniel Moore from CJS ask your line is open.
Thanks, again, Bill just wondering any update at all or color around the CFO search.
Yes, it's ongoing I wish it was she was done but we're doing well on kind of holding down the fort.
So.
The Guinea recruiting effort, it's kind of the ongoing until the day you got it done and we're not quite there yet.
So anxious to get there, though thanks for asking.
Thanks.
Thank you I'm showing no further question at this time I would like to turn the conference back to Mr. Bill Boor President of music and.
On Chief Executive Officer for any closing remarks.
Thanks, Chris just.
So just in summary, we continue to operate through some very real challenges and risks, but most notably the supply of labor that we talked about.
And the year with so much to work through its beyond gratifying to be able to report the strong financial results.
As I've said, a few times is due to a tremendous amount of hard work by our very capable and committed people across the company.
So we're all very mindful if theres a lot of work ahead, we want to reduce the backlogs, we want to provide more quality affordable homes loans and insurance coverage to the.
The folks out there that we try to serve.
So really appreciate everyone's time today, thank you for that and thanks for your continued interest in the company.
Thank you ladies and gentlemen. This concludes today's conference call. Thank you all for joining the line all disconnect.
Yes.
Yes.
Yes.
Okay.
Free cash.
Yes.
[music].
Our revenue.
[music] flow.
Okay.