Q4 2023 Cavco Industries Inc. Earnings Call
Thank you for standing by welcome to the cap Koch industries fourth quarter fiscal year 2023 earnings call and webcast. At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During this session you will need to press star one on your telephone.
To remove yourself from the queue simply press Star one one again as a reminder, today's program is being recorded and now I'd like to introduce your host for today's program, Mr. Mark Butler corporate controller and Investor Relations. Please go ahead Sir.
Good day, and thank you for joining us for KEPCO industry, its fourth quarter and fiscal year 2023 earnings conference call. During this call you'll be hearing from Bill Boor, President and Chief Executive Officer, Allison Aden Executive Vice President and Chief Financial Officer, and Paul <unk>, Chief Accounting Officer.
Before we begin we'd like to remind you that the comments made during this conference call by management may contain forward looking statements, including statements of expectations or assumptions about <unk> financial and operational performance revenues earnings per share cash flow argues cost savings operational efficiencies current or future volte.
Tell me in the credit markets are future market conditions.
All forward looking statements involve risks and uncertainties, which could affect cap cause actual results and could cause its actual results to differ materially from those expressed in any forward looking statements made by or on behalf of capstone anchor.
I encourage you to review <unk> filings with the Securities and Exchange Commission, including without limitation. The company's most recent forms 10-K and 10-Q.
Five specific factors that may cause actual results or events to differ materially from those described in the forward looking statements.
This conference call also contains time sensitive information that is accurate only as of the date of this live broadcast Friday May 19, 2023, KEPCO 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 Bill.
Thanks, Mark welcome and thank you for joining us today to review our results for the fourth quarter of 2023.
This quarter saw the full impact of the economic pressures in retail inventory issues, we've been experiencing through the latter months of calendar 'twenty two and into this year.
Our volumes were down 10% year over year revenue dropped approximately 6% or $29 million and pre tax profit was down about 15%.
So it's clearly been a challenging operating environment on.
On the positive side, we have seen improvement in order rates with net orders up meaningfully compared to the last two quarters.
In fact on a same plant basis net orders were about double what we saw in Q3.
We spoke last quarter about watching orders as we entered the seasonally stronger selling season.
It's a good sign that we also saw that order rate improved throughout the fourth quarter.
And while average selling prices are sequentially pricing has held up well despite the drop in industry shipments.
Overall, our average selling price was down about 6% sequentially. However, the majority of that decline was mix driven as opposed to price reduction.
A very important component of our business model and something we focus on in downturns is keeping our cost structure is variable as possible. So we can maintain profit and cash flow at lower volumes.
This is something that can be seen in this quarter's results.
Factory build gross margins remained high at 24, 4% essentially flat year over year, despite the negative impact of solid share purchase accounting.
Certainly this was helped by pricing and commodity cost improvement compared to last year. However, it is also due to outstanding cost management in our plants as they transition to reduce schedules.
Despite the same plant production rates being off 24% from the peak last summer gross margins have held and on a comparable basis, excluding one time items and solitaire SG&A was lower than last year's quarter.
Our leaders have adjusted quickly and very well and we are demonstrating our focus on cost and efficiency, we consider to be key to our success.
The bottom line is that in a challenging demand environment, we posted operating income of $54 3 million.
Free cash flow generation.
I'm very proud of these results that demonstrate the expertise resilience and nimbleness of our operating teams.
Regarding market conditions, it's difficult to generalize across the system in an environment like this but I'll try.
For some time we've.
We have been facing a retail inventory issue that has kept wholesale orders below actual industry retail sales.
We're nearing the end of that issue and getting closer to a one to one ratio of homebuyer demand in manufacturer orders.
I've commented before that this issue will not go away suddenly in my comment here is not to say that every local area and dealer is guidance for their target inventory.
However in general this issue is largely behind us and that's a positive for order rates going forward.
As I kept in touch with both independent retailers and our own stores. There's a lot of optimism retailers are seeing healthy traffic.
Also remained at a high level frankly higher than we saw over the previous two years.
We watch quotes is a leading indicator of future deposits that traffic and quote data support the view that to the extent interest rates and macroeconomic factors allow the fundamental need for our homes as building positive pressure for future order improvement.
We've seen in the total housing industry that new home sales are starting to improve further indicating that buyers are adjusting very interest rate changes and in many cases adjusting their expectations of the hanmi can afford.
Supporting this view after several years of product mix shifting toward multi section homes.
Now seeing that trend reverse towards single section ounce.
As Alison will cover in more detail. This quarter, we completed the solitaire acquisition and continued share repurchases, while maintaining a strong cash balance so our capital allocation approach remains unchanged by the current order environment.
I want to express my sincere appreciation to all the folks at solitaire and within Casco.
Work on various aspects of the integration, it's hard work and they've made really great progress.
I've spoken in the past about the really the very real benefit.
Rounding out product offerings, both in the Solitaire and Kafka owned stores. Our retail team has moved quickly and this is well underway.
Also focused on product updates and product development, particularly aimed at lower price point homes. So through a lot of hard work everything is moving forward with a very good combination.
Okay.
Let me switch gears last quarter I talked about the milestone achieved in January when we went live with KEPCO Huntington Dot com.
Customer facing digital home marketplace.
I won't repeat all the aspects involved in this game changing improvement and how we support our dealers and our prospective homebuyers, but I do want to give a sense of our progress.
Early traffic and lead generation has been strong and is expected to continue growing.
<unk> been very happy with the reaction of our retailers.
Particularly our smaller retailers have been enthusiastic about having an easy to use website. They can update with prices photos and videos and all retailers are benefiting from the additional exposure and leads being funneled to them for follow up.
With the site now in place and fully functional we will be continuing the process of adding more Castro brands and expanding the suite of customization options to support our retailers and homebuyers.
With that I'd like to turn it over to Alison to discuss the financial results in more detail.
Thank you Bill.
Net revenue for the period with $476 4 million down five 8% with $29 1 million compared to 505.
$5 million.
During the prior years fourth fiscal quarter.
The factory built housing segment net revenue was $456 1 million.
Now six 6% at $18 2 million and $488 3 million.
Good quarter.
The decrease was primarily due to a decline in base business units, partially offset by a four 4% increase in average revenue per home sold and $28 million from the Solitaire acquisition.
Financial services segment net revenue increased 18, 4%.
$23 million.
$8 2 million.
We do the more insurance policies in force and higher premium rate.
We offset by lower interest income earned on the acquired consumer loan portfolio continues to amortize.
Consolidated gross profit as a percent of net revenue was 25, 3% and 30 basis points from the 25, 6% in the same period last year.
The factory built housing segment gross profit decreased slightly to 24, 4% in Q4 of 2023 versus 24, 5% in Q4 of 2022, primarily due to the solitaire purchase accounting adjustments on acquired inventory.
A new accounting rules the inventory acquired is recorded at fair value.
Welcome ladies and sales side.
All of our acquired inventories so no revenue was recognized.
This reduced the factory built and consolidated gross margin percentages by 40 basis points in the fourth quarter.
Gross margin as a percent of revenue in financial services decreased to 45, 7% in Q4 of 2023 and 58, 5% in Q4 of 2022 as a result of weather events in Texas and Arizona.
Selling general and administrative expenses were $66 4 million.
13, 9% of net revenue compared to $59 7 million or 11, 8% of net revenue.
The same quarter last year.
The increase is primarily due to higher expenses incurred and leveraging third party consultants assisting with energy tax credit project.
Legal costs, specifically related to.
My former officer and his ongoing SEC litigation costs.
Costs related to Solitaire and the addition of Solitaire SG&A costs.
Q4 of 2023.
Interest income for the fourth quarter with $3 9 million.
<unk> hundred and 12% in the prior.
Your quarter.
The increase is primarily due to higher interest rates on our invested cash balances and increased lending under our commercial loan program.
Net other income this quarter was $70 million compared to negative $2 5 million of expense in the prior year quarter.
This increase is primarily driven by gains in corporate equity securities in the current year.
Losses incurred in the prior year.
Thanks, Rob.
14, 6% this quarter.
$88 6 million and $68 6 million for the prior year period.
The effective income tax rate was 19, 1% for the fourth fiscal quarter.
At 42, 1% in the same period last year.
The lower rate was the result of tax credits related to the sale of energy efficient homes.
Favorable under the internal revenue code section.
In the current quarter.
Net income attributable to cat co shareholders was $47 3 million compared to net income of $53 6 million.
Same quarter of the prior year.
Diluted earnings per share this quarter was $5 39 a share.
Versus $5 eight per share in last year's fourth quarter.
Before we discuss the balance sheet I'd like to highlight that we continue to execute on our capital allocation priorities with the recently closed acquisition of Solitaire.
And share repurchases of $30 million in it.
Fourth quarter.
The purchase of Solitaire holdings utilized.
The $106 million in net cash.
Leaving us with over $270 million of cash subsequent to the purchase.
We will continue to appropriately deploy this capital in keeping with our strategic priorities.
Now I'll turn it over to Paul to discuss the balance sheet.
Thanks Allison.
Impairing the April one 2023 balance sheets here for a second in 2022, our cash balance was $271 4 million up $27 2 million from the end of the prior fiscal year.
The increase was due to net income adjusted for noncash items and changes in working capital.
Partially offset by the acquisition of Solitaire homes common stock buybacks and purchases of property plant and equipment, primarily related to the purchase and development of our hamlet North Carolina facility and continued development of our Glendale, Arizona facility.
Investments, including short term are down primarily due to the return of capital from a joint venture and sale corporate marketable equity securities.
Inventories increased from the <unk> acquisition offset by declines in raw materials and home sales at our retail locations.
Prepaid and other assets are higher resulting from prepaid taxes associated with higher taxable income in the current year and timing of estimated payments.
Property plant and equipment is that primarily due to the solitaire acquisition and the purchase of our facility in hamlet North Carolina, and the development of our Glendale, Arizona facility as previously discussed.
Accrued expenses and other current liabilities increased from higher rebates payable more setup freight and foundation work and higher warranty reserves.
Lastly, stockholders equity was approximately $976 3 million as of April one 2023 up $145 8 million from $830 5 million as of April 2nd 2022.
This completes the financial report and now I will turn it back to Bill.
Paul.
There's also an Paul explained our balance sheet remains very healthy and this supports the continuation of a consistent strategy and capital allocation path, we've been delivering upon.
The demand downturn and need to work through industry inventory fits within our expectation that manufactured housing is a cyclical business. However, these cycles or within the broader context of an increasing need for our homes.
With a strong balance sheet, a proven ability to adjust as needed and against the backdrop of the dire need for affordable housing.
We're staying focused on the bigger picture and opportunity to positively impact that housing crisis.
We will continue to invest in operational improvements in growth.
And we will continue using share buybacks to responsibly manage the balance sheet.
With that Jonathan Please open the line for questions.
Certainly as a reminder, if you have a question at this time. Please press star 111 moment for our first question.
And our first question comes from the line of Daniel Moore from CJS Securities. Your question. Please.
Thank you Bill Alex and Paul Thanks for the color Bill maybe ask one or two extra today, given a lot of moving parts, but.
You touched on the order rates, maybe a little more clarity on.
Kind of a cadence of new water rates.
In Q4, and thus far into Q1 in other words do you have enough net new orders coming in to.
Maintain the level of production and sales we saw in Q4 over the next few quarters or do we anticipate meeting to further curtail production at least in the near term.
Yes, we pulled back on production as I indicated with the decline in production rate and certainly as the order rates are coming in now I think we're kind of in a balanced in fact, I always will point out that.
There are differences plant the plant region to region.
Got some plants that has gone down to a four day work week that are feeling optimistic and getting ready to go back to five so its differential but I'd say across the whole system.
We're in the seasonally stronger period of time as well, so I'm feeling pretty good about the balance we have right now.
Got it so at least in the short term wouldn't expect further declines and maybe start to pick up a little bit in terms of production.
Yes, that's where I think we're trending everything's on everything.
Everything subject.
Kind of a shaky in economic environment, but we're feeling pretty optimistic and as I said.
Yes.
Take a little bit from everything you're picking up.
We were at an industry.
A couple of weeks ago, and I will tell you that Tom was very positive there as I talked to retailers. So.
Getting the inventory behind US there is a big deal we talked about that and then suddenly disappears from the conversation when it's no longer an issue, but even that one to one ratio creates a pickup in manufacturing orders that I think will be really helpful.
Very helpful.
It may be difficult to answer but.
<unk> produced.
We get the number.
Including Solitaire 40, 477 homes in the quarter.
Any sense for what the underlying retail demand.
For your.
Businesses and factories look like.
Obviously, we were still in a destock period from inventories. So I wonder if you have any sense for that.
I'm not sure how to answer that I think it's kind of similar to your first question about where does the balance.
Is that right.
I guess, yes I.
I don't think I can give you anything with any precision what I can tell you is that.
As we you might remember.
Last quarter, we said hey, the thing to watch is whether orders pick up as we get into the stronger selling season.
Consistent with my comments you look at the.
If you dissect the quarter, a little bit we left the quarter at a much higher order rate than we entered it so.
I feel like we've done a good job of pulling back production rate keeping costs variable and.
Now with the optimism we are seeing in retail our activity in the subsiding of industry inventory issue I think we're in pretty good shape I'm not sure I can give you any anything more than that.
No thats helpful.
And now that we're through solitaire the purchase accounting how should we think about gross margins at least in the factory built housing portion of your business over the next one to two quarters say relative to Q4.
I think as we think about gross level consistent with what we've talked about before.
Think about kind of three areas in pricing I think we've touched on that.
We're holding our own.
We're still seeing some pressure, but certainly holding our own.
Cost perspective, a problem material commodity is still somewhat consistent.
Yes.
R&D items.
With regards to the solitaire, the 40 basis points.
The purchase accounting gain.
As we anticipated when we made the purchase.
For another couple of quarters.
Long term our solitaire.
While pro forma.
Manufacturing gross margin and ASP.
Yes, so important right now.
On a new home sale out of Solitaire Theres no negative margin impact. It's just getting through these zero margin homes from purchase accounting and that will take us a little while as Alison said.
Very helpful and it dovetails into my next question, which is just in terms of Solitaire do you expect it to begin to contribute positively to pre tax income this quarter or might that take a little bit longer.
What's sort of the glide path to getting to your average margins factory built housing.
Housing margins.
I think we can think of it kind of a glide path associated with.
Moving through the purchase accounting the other thing is that we talked about was we have a site okay.
Yes, it just come online during the purchase and we will see that ramp up that will help.
And be accretive.
Got it.
Do you have the capacity utilization quarter didn't see that in the release.
And you talked about that.
Yes, so kind of on a.
Just full operating days available were just about at 60%.
I mentioned, we did have those scheduled down days on the four day work weeks or just about 70% considering those.
That's helpful Mark Okay.
And lastly for me.
I appreciate the commentary about KEPCO homes Dot com.
Where do you see that.
Maybe two.
Two three years out in terms of is there a target percentage.
Homes that you see coming from that.
That sales channel.
Or just stay kind of incremental to growth over time any any color on that would be helpful. Thanks.
And Dan I don't know if I have a numeric target, but I'd put it in a bigger context and even.
What youre posing the question because we know how much.
Everyone's doing their homework for any any.
<unk> purchase online. So I think it's really kind of central to our strategy I would not be surprised if the vast majority of home sales a couple of years from now.
All right.
We believe that are happening today that they are starting with that online experience. So.
We think it's right at the core of how homes are going to be marketed and we also think that it's.
A huge benefit to us and our relationship with dealers because were really supporting the dealers as I said in my comments and I didn't want to be too long winded in them, but.
For many small dealers.
Their eyes are lighting up when our folks talk to them and say hey it.
It would be very easy for you to have a micro site that markets. Your dealership with all of our automated data behind it you can add photos and you cannot information.
So theyre going to be so much more effective in our relationship with them is that much deeper.
And then as we continue to we've gotten good results in the early days on visitors and conversions conversions, meaning visitor who actually asked for more information or it is.
Button in calls with deal with it.
Site provides for them so.
So we're seeing good early numbers on that and what that's all about is kind of funneling targeted leads to those dealerships. So I know I'm talking a little bit and concepts, but I think.
This is the starting point for the.
The vast majority of those homes sales for us.
Possibly now, but definitely as time progresses.
So.
As far as targets I don't know what.
They accept most.
No that is helpful. I appreciate it I may jump back with a follow up or two thank you.
Alright, Thanks, Dan.
Thank you one moment for our next question.
And our next question comes from the line.
<unk>.
Greg Palm.
From Craig Hallum. Your question please.
Yes, hi, thanks.
For taking the questions here.
Maybe wanted to follow up.
Some of the earlier questions about just kind of overall activity levels demand environment.
You said order rates ended the quarter at <unk>.
Much higher rate in the beginning any way you can sort of quantify that and just to be clear what have you seen in April and may specifically as well have those order rates continued to increase.
Whatever six or seven weeks post quarter end.
Yes, Im just looking at some data to see what I can frame for you.
I can tell you I mean, one thing.
Tuck in net and I'm not saying this is the biggest driver, but one thing when I talk about order rates I'm talking about are net of cancellations cancellations of.
<unk> fallen back down to not being an important part of the conversation so.
Part of that to be fair is because our backlogs in many places we're very short so folks placed an order it's going to go into production.
So not taking too much credit for the cancellation reduction, it's kind of natural but we're talking about a net orders and just eyeballing it or looking at some data.
<unk> was.
It was.
On a same plan basis.
Was well higher than we've seen.
And nearly a year.
And you are asking me about numbers in April I'll, just tell you that directionally, our net orders on a same plan basis are up over March.
Some of that seasonal but.
The significance of the pickup as I think bigger than seasonal in my opinion.
And also.
Being able to say, we got a really good seasonal pickup in wholesale orders, while inventories, reducing as a pretty large statement I believe.
Yes.
That's interesting and I know.
Maybe order rates arent, even a great approximation.
The actual activity levels, because I think what you said is whether you look at traffic or quota and it's been really strong.
Why hasn't that maybe resulted in higher order rates today and more importantly, higher production levels. I mean is it just as simple as the inventory levels were just a little bit higher and it took a little bit longer.
To work through because I think everybody is trying to get a sense for why.
At least industry production data was was so weak and not just calendar Q1, but March specifically.
I know knowing that there is some sort of a lag involved but maybe you could just tie that back out to the production if youre able to.
Yes, I mean, you're you're hitting all the points that I can make to be honest I mean, you do have we've had the inventory thing so that's the.
And order.
The home that leaves the retail.
Not getting replace because the retailer wants to get inventory down so that does not turn into an order when you've got an inventory problem.
I commented that I feel like that discussions about ready to be over.
And then.
So that's one big factor and then when we look at traffic and close traffic has actually been in.
In my view pretty healthy throughout rate and I've always said that what I think that indicates is the underlying need there are people out there trying to figure out can I afford a home.
My family means Theyre trying to do that work and they were just kind of put on their heels by the interest rate.
Increases on top of dramatic increases for our products.
But the traffic has consistently been there the order strength over the last several months or I'm, sorry, not orders the cloud strength over the last several months I view as a positive indicator, but thats really.
A couple of months, leading indicator to the extent, it's correlated the orders because it takes people time to make the decisions and.
So it's easy to be talking to a number of retailers and asked for quotes.
Indicates a high level of activity of shopping trying to figure out how to make the purchase.
But it won't result in.
The correlation between quotes and true order.
Not quick it can be a couple of months.
So I'm not bothered by the fact that we're seeing those positive indicators, but we're not but we haven't seen the pickup in wholesale orders I think it's very explainable by those factors and I think it's common.
Yes.
And I just wanted to be sure I heard you right.
You talked about at.
At least I think some plants move into.
Five day work schedule.
Are any of them at five five days today or how many are going to five five days I mean, I assume that that alone would mean.
All else equal higher rates of production going forward versus what we've seen but maybe you can just confirm that.
Our plants have been kind of changing schedules based on their unique circumstances and my comment was generally that is.
As we talk to our plants, which we stay in very close contact with them they're on their own situation.
I would say the majority had reduced to four day schedules.
And the last couple of months and my comment was that now.
Those conversations are turning where they are saying.
Hey, we're thinking about whether we're seeing enough out of retail right now that we might be able to climb back to five so I don't have a number to tell you out of our entire plant system.
Who's on the verge of going back to five it's just the conversation has shifted in that direction, which is a positive.
Understood Okay.
On pricing.
I think you said the majority of the ASP decline sequentially was just.
Due to mix side Q4, see that being in kind of an ongoing trend.
Or do you think sort of the bulk of that was.
Basically witnessed this quarter and to be clear any any change in ASP from solitaire or was it pretty consistent.
Youre, saying solitaire period to period or Solitaire has impact on our average selling price solitaire did impact on overall selling price correct.
Yes, I think we looked at that and they werent, a meaningful plus or negative to the average selling price across the company.
And you can actually watch from are the data that we provide because we give both units and floors. So you can kind of do the algebra and figure out that we had a pretty significant move toward single.
Single wide sales from.
The multi section and I don't necessarily think Thats, a bad thing I think thats indicative of the affordability issues that people are facing so people are kind of lowering your expectations there moving down in the house, they might've been able to afford in previous periods and there.
They are starting to get off their heels and try to make those decisions and place orders.
So and I've talked in the past, we can track average selling price.
It's obviously an important piece.
But in my opinion and when we looked at the data at operating level, we price our products.
I've said this before and I don't know if Peter completely get what I'm, saying, but we price our products so that.
Our time in our factory is that a consistent profitability, whether we're making a single module Homer multi section.
I don't view it as a profit issue to see that mix shift, but it certainly can have an impact on average selling price.
Okay.
Alright, I think I'll leave it there for now I appreciate all the insights.
Thank you and as a reminder, if you have a question. Please press star 111 moment for our next question.
And our next question comes from the line of Jay Mccanless from Wedbush. Your question. Please.
Yes, hi, everyone. Thanks for taking my questions could you give us a sense of where chattel rates are today, and maybe where they were this time last year.
Yes, sure Dave I can do that so right now chattel rates are running just a little bit over 9%. So there can be between nine and $9 75.
So that's up roughly from about seven 5% a year ago.
Thanks.
And then bill just to drill down more because I was intrigued by your comments around more single section.
There isn't going to be a profitability drop off any more if you're building more singles versus multi.
Is that what youre trying to get across.
That's what we aim for with pricing and operating our plants, because again I kind of view. It is we're selling time.
We're selling time and capacity in our plants and so you've got a lot of complexity in this discussion because you can have.
Challenging to make single Wides, you can have easier to make double wides some products flow through the plant easier than others, but in general our pricing approach tries to.
Equalize.
The profitability, we get for the use of our capacity is kind of the concept and I'm trying to explain.
Got it.
I think one topic, we haven't talked about are the park operators, what type of demand and pricing pushback or are you seeing from them.
Yes, that's a good catch and I, probably should have commented on it earlier.
We actually have seen community operators dropped off a bit recently in their wholesale orders and.
I was initially really puzzled by it I took the opportunity to talk to a few of them.
And.
Initially I was struggling with the answer but they convinced me.
<unk>.
The comments I got basically summarize where we would be ordering more homes right now if we could get them permitted and set in the field. So they have been very clear that their issue is.
Placement of the homes not the need for their homes.
Has been an issue because we can use the orders of course.
They have whereas they have been a source of strength in orders relative to dealers in past quarters, and we have seen a drop off more recently.
Open that we'll figure out how to solve this permitting.
Right.
Issue as an industry, because it's a silly, saying that you're getting in the way of orders right now in my opinion.
Got you.
And then.
Just to kind of clarify because.
It seems like at the beginning you talked about how we're through the worst of the Destocking, but then when you were talking about the retail channel you said some dealers I think are still hesitant to replace zones. I guess, we're in talking to the retail operators, where do you think they are in terms of their inventory levels.
More importantly, their floor plan lenders comfort with where their inventory levels are now.
Yes, I'm not sure what I said.
Right.
You're picking up there my comment I think it was intended to say.
Probably dealers.
Dealers out there that are still Sam I inventories too high.
But in general when you look at it across the system, it's really.
In my opinion, it's gotten to the point, where it's not really a factor at this point on the one to one ratio. So I was just kind of acknowledging that there is still some to be done Kelly and isolated situations, but I think we're through it.
I have not.
And I have thought.
What about talk to folks about this floor plan availability I have not seen or heard that to be a constraint.
And so as we've talked before dealers are destocking for good business reasons theyre managing their turn rates.
Their cost of funds on floor planning has gone up so they're trying to get their inventory down on their own.
But I have not noted any dramatic.
Forcing function coming from the floor plan lenders.
Okay.
Alright, I think Thats all my questions. Thank you again.
Thanks Jay.
Thank you. This does conclude the question and answer session of today's program I'd like to hand, the program back to Bill Boor for any further remarks.
Okay. Thanks, Jonathan.
I think our results this quarter highlight the ability of the organization to manage costs and to generate cash even when conditions are challenging.
And everyone at Kafka is ready for the inevitable return of demand. So that we can help more families get the homes. They need so with that I will thank you as always for your interest in <unk> and we look forward to keeping everyone updated on our progress.
Thank you, ladies and gentlemen for your participation in today's conference. This does conclude the program you may now disconnect good day.
Okay.
[music].
Okay.
Yes.