Q4 2024 Cavco Industries Inc Earnings Call

Yeah.

Operator: Good day, and thank you for standing by. Welcome to the fourth quarter of fiscal year 2024 Cavco Industry Earnings Call. At this time, all participants are in listen-only mode.

Speaker Change: Good day, and thank you for standing by welcome to the fourth quarter of fiscal year 2020 for Copco industry earnings call. At this time all participants are in listen only mode statistic speaker's presentation there'll be a question and answer session to ask a question. During the session you will need to press star one or telephone you Dan here.

Operator: After this speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 11 on your telephone. You'll then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I'd now like to hand the conference over to your first speaker today, Mark Fusler, Corporate Controller, Investment Relations. Please go ahead.

Mark Fusler: Our main message advising your hand this race to withdraw your question. Please press star one again, please be advised that today's conference is being recorded I would now like to hand, the conference over to your first speaker today marks Buster corporate controller and Investor Relations. Please go ahead.

Mark Fusler: Good day, and thank you for joining us for Cavco Industries' fourth quarter and fiscal year 2024 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 Bigbee, Chief Accounting Officer. Before we begin, we'd like to remind you that comments made during this conference call by management may contain forward-looking statements, including statements of expectations or assumptions about Cavco's financial and operational performance, revenues, earnings per share, cash flow or use, cost savings, operational efficiencies, current or future volatility in the credit markets, or future market conditions.

Speaker Change: Good day, and thank you for joining us for capital industries fourth quarter and fiscal year 2024 earnings conference call. During this call you'll be hearing hearing from Bill Boor, President and Chief Executive Officer, Allison Aden Executive Vice President and Chief Financial Officer, and Paul <unk>, Chief Accounting Officer.

Mark Fusler: All four-looking statements involve risks and uncertainties that could affect Cavco's actual results and could cause its actual results to differ materially from those expressed in any forward-looking statement made by or on behalf of Cavco. I encourage you to review Cavco's 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 any forward-looking statement.

Speaker Change: Before we begin we'd like to remind you that 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 or use cost savings operational efficiencies current or future.

Speaker Change: Volatility in the credit markets are future market conditions.

Speaker Change: All forward looking statements involve risks and uncertainties, which could affect <unk> 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 capital.

Speaker Change: 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, which identify specific factors that may cause actual results or events to differ materially from those described in any forward looking statements.

Mark Fusler: This conference call also contains time-sensitive information that is accurate only as of the date of this live broadcast, Friday, May 24, 2024. Cavco undertakes no obligation to revise or update any forelooking 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?

Speaker Change: This conference call also contains time sensitive information that is <unk>.

Speaker Change: Accurate only as of the date of this live broadcast Friday May 24 2024.

Speaker Change: <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.

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

William C. Boor: Thanks, Mark. Welcome, and thank you for joining us today to review our fourth quarter results. The fourth quarter was the transition quarter we were looking for. Coming out of the holidays, we had a number of plants on four-day schedules, four-day-a-week production schedules, and several took extended holiday shutdowns in January due to low backlogs at the time. Those initial loss production days at the beginning of the quarter drove our essentially flat sequential wholesale shipment.

William C. Boor: Thanks, Mark welcome and thank you for joining us today to review our fourth quarter results.

William C. Boor: The fourth quarter was the transition quarter, we were looking for coming out of the holidays. We had a number of plants on four day schedules four day, a week production schedules and several took extended holiday shutdowns in January due to low backlogs at the time.

William C. Boor: Those initial lost production days at the beginning of the quarter drove our essentially flat sequential wholesale shipments.

William C. Boor: During the quarter, though, order rates strengthened, and almost all of our plants have now worked their way back to five-day schedules and begun increasing their daily production. We saw the first quarter-to-quarter backlog increase since the downturn began, which is what we were looking for to indicate that buyers are continuing to return to the market. We had hoped this would be facilitated by declining mortgage rates, but as you know, that didn't happen. But still, buyers are returning because they need homes. They're adjusting to the higher rates, and they're adjusting their expectations around the home they can afford.

William C. Boor: During the quarter, though.

Order rates strengthened in almost all of our plants have now work their way back to fight these schedules and began increasing their daily production rates.

William C. Boor: We saw the first quarter to quarter backlog increased since the downturn began which is what we're looking forward to indicate that buyers are continuing to return to the market.

William C. Boor: We would hope this would be facilitated by declining mortgage rates, but as you know that didn't happen.

William C. Boor: Still buyers are returning because they need homes. They are adjusting to the higher rates and they are adjusting their expectations around the home they can afford.

William C. Boor: On a same plant basis, orders continued their sequential improvement for the sixth straight quarter. It hasn't been dramatic, but it has been consistently improving despite the lack of rate relief noted earlier. Within the context of what I've said here, our capacity utilization for the quarter was consistent with the last few at approximately 60%. However, given the downtime earlier in the quarter, the takeaway is that we left the quarter at a higher utilization than we started, regarding backlog improvement. We ended the quarter with $191 million, up from $160 million in Q3.

William C. Boor: On a same plant basis orders continued their sequential improvement for the sixth straight quarter. It hasnt been dramatic but it has been consistently improving despite the lack of rate relief noted earlier.

William C. Boor: Within the context of what I've said here our capacity utilization for the quarter was consistent with the last few at approximately 60%.

William C. Boor: However, given the downtime earlier in the quarter the takeaways that we left the quarter at a higher utilization than we started.

William C. Boor: Regarding the backlog improvement.

William C. Boor: We ended the quarter with $191 million up from $160 million in Q3.

William C. Boor: Pricing in the backlog was basically flat, so this represents a unit backlog improvement of roughly 20%. At quarter end, we had about seven to eight weeks in the backlog. Despite a small reduction in average selling price, we were able to maintain gross margin in the housing segment at 22.4%, which was flat compared to gross margin last quarter.

William C. Boor: Pricing in the backlog was basically flat. So this represents a unit backlog improvement of roughly 20%.

William C. Boor: At quarter end, we had about seven to eight weeks in the backlog.

William C. Boor: Despite a small reduction in average selling price we were able to maintain gross margin in the housing segment at 22, 4%.

William C. Boor: Which was flat compared to the same.

William C. Boor: The gross margin last quarter.

William C. Boor: I know there's continuing interest in understanding the status of community orders. We've discussed this for several quarters, having said that we expect it to take a few quarters into calendar 2024 to really see meaningful improvement. However, community orders are still lagging.

William C. Boor: I know there is continuing interest in understanding the status of community orders. We've discussed this for several quarters, having said that we expect it to take a few quarters into calendar 2024 to really see meaningful improvement.

William C. Boor: Community orders are still lagging every community has its own story, so improvement will happen over a period of time.

William C. Boor: Every community has its own story, so improvement will happen over a period of time. Our expectation remains that community orders will improve this calendar year as inventory levels come down. The order strength we've seen thus far has primarily come from retail dealers, so the order boost from communities is still ahead. Commenting on the fiscal year, our teams across operations, including retail and financial services, really showed their ability to react quickly and effectively to market dynamics.

Our expectation remains that community orders will improve this calendar year as inventory levels come down.

William C. Boor: The order strength, we've seen thus far has primarily come from retail dealers. So the order boost from communities is still ahead.

William C. Boor: Commenting on the fiscal year, our teams across operations, including retail and financial services really showed their ability to react quickly and effectively to market dynamics.

William C. Boor: Despite the slowdown, we've maintained healthy margins, profitability, and cash flow. Now, as we increase schedules, our operators are ramping production rates in an effort to keep backlogs in check. This is the nature of the industry, and the ability to adapt quickly is being shown throughout our operations. I want to take a few minutes to comment on the year we just completed and some really important accomplishments. Our stated objective when the market got hit with rapid interest rate increases was not only to effectively manage the cycle but to stay focused on our priorities so we would come out of the down cycle stronger and even more prepared to supply homes to deserving families.

The slowdown we've maintained healthy margins profitability and cash flows.

William C. Boor: Now as we increase schedules are operators of ramping production rates in an effort to keep backlogs and check.

William C. Boor: This is the nature of the industry and the ability to adapt quickly is being shown throughout our operations.

William C. Boor: I wanted to take a few minutes to comment on the year, we just completed and some of the really important accomplishments. Our stated objective as the market got hit with rapid interest rate increases was not only to effectively manage this cycle, but.

William C. Boor: But to stay focused on our priorities. So we would come out of the down cycle stronger and even more prepared to supply homes to deserving families.

William C. Boor: First and foremost, our plants continued an impressive improvement in our safety results. This fiscal year, our total recordable injury rate was reduced 37%, continuing a multi-year trend of significant improvement, and in calendar 2023, we experienced a 35% lower incident rate compared to the industry benchmark. We also grew our retail footprint by adding 15 stores in the fiscal year after growing 19 stores in fiscal year 23. This growth is in support of our plant distribution needs, and our current system stands at 79 retail locations. We announced the first nationally available HUD-approved line of duplex homes.

William C. Boor: First and foremost first and foremost our plants continued an impressive improvement in our safety results. This fiscal year, our total recordable injury rate was reduced 37%.

This continues a multi year trend of significant improvement in the calendar 2023, we experienced a 35% lower incident rate compared to the industry benchmark.

William C. Boor: We also grew our retail footprint by adding 15 stores in the fiscal year after growing 19 stores in fiscal year 'twenty three.

William C. Boor: This growth is in support of our plant distribution needs in our current system stands at 79 retail locations.

We announced the first nationally available HUD approved line of duplex homes interest in our anthem series has exceeded expectations and we anticipate orders for this new answer to the affordable housing crisis to grow in the coming quarters.

William C. Boor: Interest in our Anthem series has exceeded expectations, and we anticipate orders for this new answer to the affordable housing crisis to grow in the coming quarter. We also continue to develop and rollout our digital marketing platform across our family of brands with very strong contacts and lead generation. We completed the integration of the Solitaire Acquisition, which closed in late fiscal year 23.

William C. Boor: We also continued development and rollout of our digital marketing platform across our family of brands with very strong contacts and lead generation.

William C. Boor: We completed the integration of the Solitaire acquisition, which closed in late fiscal year 'twenty three.

William C. Boor: This included efforts to optimize product offerings across the combined retail system, as well as refreshing the solitaire product offering. The full impact of this acquisition will show in the improving market. We advanced our people strategy with continued improvements in leadership and development, Pay and Benefits, Career Processes, and Workplace Improvement.

This included efforts to optimize product offerings across the combined retail system as well as refreshing the solitaire product offering.

William C. Boor: Impact of this acquisition, we will show in the improving markets.

William C. Boor: We advanced our people strategy with continued improvements in leadership and development.

William C. Boor: Pay and benefits career processes and workplace improvements.

William C. Boor: This work is resulting in higher skills, reduced turnover, and improved job satisfaction, and it creates the foundation for our long-term success. A critically important part of that people strategy is training and development. After a standing start only a few years ago, Cavco was recognized this past year as one of the top training organizations in the world through Training Magazine's Apex Award.

William C. Boor: This work is resulting in higher skills reduce turnover and improved job satisfaction and it creates the foundation for long term success.

William C. Boor: A critically important part of that people strategy is training and development. After a standing start only a few years ago. <unk> was recognized this past year as one of the top training organizations in the world through the training magazine's Apex Award.

William C. Boor: We purchased $110 million of our stock while maintaining a very strong balance sheet capable of supporting our continued growth. With all these improvements, steady increases in orders, and a return to normal community orders still ahead of us, we're looking forward to producing more quality, affordable homes in the quarters and years ahead. With that, I'd like to turn it over to Allison to discuss the financial results in more detail. Thank you, Bill.

William C. Boor: We purchased $110 million of our stock while maintaining a very strong balance sheet capable of supporting our continued growth investment.

With all these improvements steady increases in orders and a return to normal community orders still ahead of US we're looking forward to producing more quality affordable homes in the quarters and years ahead.

Speaker Change: With that I'd like to turn it over to Alison to discuss the financial results in more detail.

Allison Aden: Net revenue for the fourth fiscal quarter of 2024 was $420.1 million, down $56.3 million, or 11.8 percent, compared to $476.4 million during the prior year period. sequentially, net revenues decreased $26.7 million, driven by a reduction in both units sold and, to a lesser extent, average selling prices, partially offset by higher revenues. Within the factory build housing segment, fourth-quarter revenue was $398.5 million, down $57.6 million, or 12.6% from $456.1 million in the prior year quarter.

Alison: Thank you Bill net revenue for the fourth fiscal quarter of 2024 was $441 million down $56 3 million or 11, 8% compared to $476 4 million in the prior year period.

<unk> net revenues decreased $26 7 million driven by a reduction in both unit sold and the lesser extent average selling prices, partially offset by higher revenues from financial services.

Alison: Within the factory built housing segment fourth quarter revenue was $398 5 million down $37 6 million or 12, 6% from $456 1 million in the prior year quarter.

Alison: Decrease was primarily due to a reduction in wholesale.

Allison Aden: The decrease was primarily due to a reduction in homes sold. Sequentially, for the factory-built housing segment, net revenues compared to the prior quarter were down $28.4 million, or 6.7%, from $426.9 million. The decrease was due to a reduction in homes sold and a lower average selling price per home.

Alison: Sequentially for the factory built housing segment net revenue as compared to the prior quarter was down $28 4 million or six 7% before him in 2006 nine level. The decrease is due to a reduction in homes sold and lower average selling price per home.

Allison Aden: Factor utilization for Q4 of 2024 was approximately 60% when considering all available days for production but was nearly 70% excluding scheduled downtime for local market conditions. This utilization level was consistent with the past four quarters. For the financial services segment, net revenue increased 6.4% to $21.6 million in Q4 of 2024 from $20.3 million in the prior year period. This increase was primarily due to more insurance policies in force and higher insurance premiums as recent rate increases become realized, partially offset by fewer loan sales. Consolidated gross profit in the fourth fiscal quarter as a percentage of net revenue was 23.6 percent, down 170 basis points from 25.3% in the same period last year.

Alison: Factory utilization for Q4 of 2024 was approximately 60% when considering all available days for reduction.

Nearly 70% excluding scheduled downtime for local market conditions.

Alison: This utilization level was consistent with the past four quarters.

Alison: For the financial services segment net revenue increased six 4% to $21 6 million in Q4, as 2024 and <unk>.

Alison: $23 million in the prior year period.

Alison: This increase was primarily due more insurance policies in force and higher insurance premiums as recent rate increases become realized partially offset by fewer loan sales.

Alison: Consolidated gross profit in the fourth fiscal quarter as a percentage of net revenue was 23, 6%.

Alison: Down 170 basis points from 25, 3% in the same period last year.

Allison Aden: In the factory-built housing segment, gross profit declined 200 basis points to 22.4% in Q4 of 2024 versus 24.4% in Q4 of 2023, driven by lower average selling prices and volume, partially offset by lower input costs. Gross profit as a percentage of revenue and financial services decreased slightly to 45% in Q4 of 2024 from 45.7% in Q4 of 2023, selling general and administrative expenses in the fourth quarter of fiscal 2024 for 61.4 million, or 14.6 percent of net revenue compared to 66.4 million or 13.9 percent of net revenue during the same quarter last year.

Alison: And the factory built housing segment gross profit declined 200 basis points.

Alison: Two 4% in Q4 of 2024 versus 24, 4% in Q4 of 2023.

Alison: And by lower average selling prices and volume, partially offset by lower input costs.

Alison: Gross profit as a percentage of revenue in financial services decreased slightly to 45% in Q4 of 2020 or 45, 7% in Q4 of 2023.

Allison Aden: The decrease in SG&A expense was due to costs in the prior year that did not recur in 2024, including costs for third-party tax consultants, solitaire acquisition costs, lower costs for the litigation between an indemnified former officer and the SEC, and lower compensation on reduced earnings. Speaking of the SEC litigation with a former officer, in May of 2024, the SEC settled all outstanding claims against their former CFO, closing all pending matters Interest income for the fourth quarter was $5.3 million, up 35.6% from the prior year quarter. This increase over the prior year was primarily due to a higher interest rate on larger cash balances.

Alison: Selling general and administrative expenses in the fourth quarter fiscal 2024 was $61 4 million or 14, 6% of net revenue compared to $66 4 million or 13, 9% of net revenue during the same quarter last year.

Alison: The decrease in SG&A expense was due to cost in the prior year that did not recur in 2024.

Alison: <unk> costs for third party tax consultants Solitaire acquisition cost.

Alison: Lower cost with the litigation between an enterprise former officer any SEC.

Alison: Our compensation on reduced earnings.

Speaking of the SEC litigation with the former officer in May of 2020 for the SEC settled all outstanding claims against the former CFO closing all pending matters.

Interest income for the fourth quarter was $5 3 million up 35, 6% in the prior year quarter.

Alison: The increase over the prior year, primarily due to higher interest rate.

Alison: On larger cash balances.

Allison Aden: Pre-tax profit was 26.7% this quarter, to $42.9 million from $58.6 million for the prior year period. The effective income tax rate was 21% for the fourth fiscal quarter compared to 19.1% in the same period last year.

Alison: <unk> profit was 26, 7% this quarter to $42 9 million.

Alison: The $8 6 million for the prior year period.

Alison: The effective income tax rate was 21% for the fourth fiscal quarter.

Alison: <unk> to 19, 1% in the same period last year.

Paul Bigbee: Net income to Cavco stockholders was $33.9 million compared to net income of $47.3 million in the same quarter of the prior year. Diluted earnings per share this quarter were $4.03 versus $5.39 per share in last year's fourth quarter. Now I'll turn it over to Paul to discuss the balance sheet. Thank you, Allison. Comparing the March 30, 2024 balance sheet with the April 1, 2023 balance sheet, the cash balance was $352.7 million, up $81.3 million or 30% from $271.4 million at the end of the prior fiscal year. The increase is primarily due to net income adjusted for non-cash items such as depreciation, stock compensation expense, and gain on sale of loans and investments.

Alison: Net income to capital stockholders with $33 9 million compared to net income of $47 3 million in the same quarter of the prior year.

Alison: Diluted earnings per share this quarter was $4 <unk>.

Alison: Versus $5 39 per share in last year's fourth quarter.

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

Paul: Thank you Allison.

Paul: Comparing the March 32020 for balance sheet, Therefore, one 2023.

Paul: Cash balance was $352 7 million up $81 3 million or 30% from $271 4 million at the end of the prior fiscal year.

Paul: The increase was primarily due to net income adjusted for noncash items such as depreciation.

Paul: Compensation expense and gain on sale of loans and investments.

Paul Bigbee: 11 million, working capital adjustments providing approximately $55.7 million of cash related to inventory and account receivable decreases, and consumer and commercial loan activity with payments received and the sale of loans greater than the use of cash for originating loans. These increases were partially offset by paydowns in accounts payable and crude liabilities, the acquisition of Kentucky Dream Homes for $17.9 million, net P&E purchases of $17.4 million, and share repurchases of $109.

Paul: $11 million working capital adjustments, providing approximately $55 7 million of cash related to inventory and account receivable decreases and consumer and commercial loan activity with payments received in the sale of loans greater than the use of cash originating loans.

Paul: These increases were partially offset by paydowns in accounts payable and accrued liabilities the acquisition of Kentucky Dream homes for $17 9 million net.

Paul: <unk> purchases of $17 4 million and share repurchases of $109 3 million.

Paul: Restricted cash and the related.

Paul Bigbee: Restricted cash and the related, Other current liability, increase from cash collected on service loans in our financial services segment. Prepaid and other assets were lower due to a reduction in delinquent Ginnie Mae loans personally offset by higher prepaid insurance.

Paul: Other current liability increase from cash collected on service loans in our financial services segment.

Paul: Prepaid and other assets was lower due to a reduction in delinquent Ginnie Mae loans, partially offset by higher prepaid insurance.

William C. Boor: The remaining change is due to normal amortization of pre- Property plant and equipment is down primarily due to current year purchases more than offset by depreciation and the sale of unutilized equipment acquired with solid, Accrued expenses and other current liabilities are down from lower accrued bonuses, customer deposits, and, as mentioned above, a reduction in delinquent Ginnie Mae loans. Lastly, stockholders equity exceeded $1 billion, up $57.1 million from $976.3 million as of April 1, 2023. With that, I'll turn it back to Bill. Thank you, Paul.

Paul: The remaining changes due to normal amortization of prepaid.

Paul: Property plant and equipment is down primarily due to current year purchases more than offset by depreciation and the sale of Unutilized equipment acquired with solid chair.

Paul: Accrued expenses and other current liabilities are down from lower accrued bonuses customer deposits and as mentioned above the reduction in delinquent Ginnie Mae loans.

Paul: Lastly, stockholders equity exceeded 1 billion up $57 1 million from $976 3 million.

Paul: From April one 2023.

And with that I'll turn it back to bill.

Thank you Paul.

William C. Boor: I can't let the moment pass without a comment about the SEC situation and closure of that issue. As Allison mentioned, our former CFO and the SEC reached a settlement that was recently made public. I've been here since the start of this situation, initially as an independent director and then in my current role.

Speaker Change: I can't let the moment pass without a comment about the SEC situation and closure of that issue as Alison mentioned, our former CFO and the SEC reached a settlement that was recently made public.

William C. Boor: I've been here since the start of this situation initially as an independent director and then in my current role.

Operator: I'm very proud that this company has continued to operate with excellence and grow in many important ways during this time. I can't count how many times I've told investors how much I look forward to the day when I can report that this issue is behind us, and today is that day. To those investors who have stuck with us throughout, on behalf of everyone at Cavco, thank you very much for your continued confidence.

I am very proud that this company has continued to operate with excellence and grow in many important ways. During this time.

William C. Boor: I can't count how many times I've told investors how much I look forward to the day when I can report that this issue is behind us.

William C. Boor: Today is that day.

William C. Boor: To those investors, who have stuck with us throughout.

William C. Boor: On behalf of everyone at Caf code. Thank you very much for your continued confidence in us.

Operator: With that, Marvin, please go ahead and open the line for questions. Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced.

Speaker Change: With that Marvin. Please go ahead and open the line for questions.

Speaker Change: Thank you at this time, we will conduct a question and answer session. As a reminder to ask a question you will need to press star one on your telephone wafer named again too.

Marvin: To withdraw your question. Please press star one again, please standby, while we compile the Q&A roster.

Operator: To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. Our first question comes from a line from Greg Palm of Greg Holm. Your line is now open.

Speaker Change: Our first question comes from the line of Greg Palm.

Speaker Change: Craig Hallum. Your line is now open.

Gregory William Palm: Yeah, hey, everyone. Thanks for taking the questions. I wanted to start with a little bit of color on what you're seeing in the community channel. Correct me if I'm wrong, but it didn't sound like there was sort of a much change in expectations, but, you know, curious if you could, please comment on, you know, visibility levels and, you know, relative to last quarter. Maybe we'll start there. Yeah, yeah. Thanks, Greg.

Speaker Change: Yes, hi, everyone. Thanks for taking the questions I wanted to start with a little bit of color on what youre seeing in the community channel.

Speaker Change: Correct me, if I'm wrong, but it didn't sound like there was sort of much change in expectations, there, but curious if you can.

Speaker Change: Please comment on visibility levels.

Speaker Change: Relative to last quarter, and maybe we'll start there.

Speaker Change: Yeah, Thanks, Greg it's.

William C. Boor: You know, it is kind of more of the same on that even over the last several quarters. We kind of hate to speculate here, as you know, but we were still looking kind of well into calendar 2024 before we thought that we'd really start seeing community orders ramp up significantly. And so we're still not at that point.

Gregory William Palm: It is kind of more of the same on that even over the last several quarters.

Speaker Change: I hate to speculate here as you know, but we were still working.

Gregory William Palm: Well into calendar 2024, before we thought that we'd really start seeing community orders ramp up significantly and so we're still not to that point.

William C. Boor: And it's kind of been more of the same. I think they're working through it, you know, even though the orders aren't here yet. I'm confident in my discussions that inventories are coming down, and so we still feel the same as we have for a while, that we should see improvement this calendar year. Yep, makes sense. And I know we're all cognizant of, (inaudible) Yeah, you know, trying to characterize this quarter as we see it, which is this past quarter, which is that it's been one of transition, you know, our shipment numbers.

Speaker Change: And it's kind of been more of the same I think theyre working through it.

Even though the orders aren't here yet.

Speaker Change: Confident in my discussions that inventories are coming down and so we still feel the same as we have for well that we should see improvement this calendar year.

Speaker Change: Yes, it makes sense.

Speaker Change: I know you're cognizant of.

Speaker Change: But you don't provide any guidance, but you at least gave a little bit of color around <unk>.

Speaker Change: Production rates, where it was.

Speaker Change: Where it is today should we at least.

Speaker Change: Is there any sort of sense on an increase in production rates.

Speaker Change: For instance, this quarter versus last.

Speaker Change: Yes.

Speaker Change: Tried to characterize this quarter as we see it which is this past quarter, which is that it's been one of transition.

Speaker Change: And our shipment numbers.

William C. Boor: We're really heavily influenced by the last production days that I mentioned at the beginning of the quarter. And as I said in my comments, you know, we talk about a utilization of 60%, but if you think about that last time at the beginning, that means we finished the quarter at a higher pace.

Speaker Change: We're really heavily influenced by the loss production days that I mentioned at the beginning of the quarter and as I said in my comments.

Speaker Change: We talk about utilization.

Speaker Change: Utilization of 60%, but if you think about that last time at the beginning.

Speaker Change: That means we finished the quarter at a higher pace. So we're starting to is as I indicated schedules are getting back it's not only schedules, but it's also run rates.

William C. Boor: So we're starting to, as I indicated, schedules are getting back. But it's not only schedules, but it's also run rate that the plants are managing to try to, you know, ramp back up and stay kind of in line with market demand so that, in some cases, backlogs don't actually get away from us. So I think we're clearly in a better position now, then we were at the beginning of the calendar year, and then we were for most of last year. We've seen that steady improvement in wholesale orders. And, you know, I do think I'm repeating myself here a little bit.

The plants are managing trying to ramp back up and stay kind of in line with market demand so that.

Speaker Change: In some cases, so the backlogs don't actually get away from us so.

Speaker Change: I think we're clearly in a better position now than.

Speaker Change: Then we were at the beginning of the calendar year and then we were for most of last year.

Speaker Change: We've seen that steady improvement in wholesale orders.

Speaker Change: And I do think I'm repeating myself here a little bit.

Allison Aden: But I do think that's noteworthy given that we haven't really seen interest rates. So, if you have a view that interest rates have some potential for going down a little bit in the coming quarters and if you agree with our view that community orders are a bit of a tailwind, then, you know, I think we're heading to some better times, notwithstanding some significant economic shock. Yeah, yeah, makes sense. A couple for Allison, you know, first on SG&A.

Speaker Change: But I do think thats noteworthy given that we haven't really seen interest rate relief.

Speaker Change: So if you have a view that interest rates have some potential forward going down a little bit in the coming quarters and if you agree with our view that community orders are a bit of a tailwind than I think we're heading into some better times notwithstanding some significant economic shock.

Speaker Change: Yes that makes sense.

Speaker Change: A couple for Allison first on SG&A.

Allison Aden: You know, I was down a little bit sequentially. Was that mostly just due to, you know, lower revenue in the variable portion? And I guess more importantly, how do you sort of feel about SG&A going forward in terms of an absolute level? Yes, as I mentioned in the call, when you compare it to the prior year, obviously, we're down for some non-recurring costs, and quarter to quarter, you saw the reduction that we have no SEC-related identified costs for former officers.

Allison Aden: It's down a little bit sequentially was that mostly just on lower revenue and the variable portion and I guess more importantly, how do you sort of feel about SG&A going forward in terms of an absolute level.

Allison Aden: Yes, as I mentioned in the call when you compare it to.

Speaker Change: The prior year, obviously were down four and some nonrecurring costs in quarter to quarter. You saw the reduction that we have no SEC related indemnify cost a former officer.

Allison Aden: I think that as we look at costs now and as we go forward, we've talked about that SG&A is a high variable cost component to that. So we're looking at a pretty steady state right now. And of course, as the top line grows, we'll see our variable compensation flow through SG&A. So, still, as I said, stays pretty consistent to the level of the top line and still a high component that's variable. Okay. And then my last one was just more of a clarification.

Speaker Change: As we look at costs now.

Speaker Change: And as we go forward, we've talked about that Sanjay.

Sanjay: Sanjay SG&A as a high variable cost component to that so we're looking at a pretty steady state right now and of course as the topline grows we'll see available compensation flow through SG&A.

Sanjay SG&A: Still stays pretty consistent to hit the level of top line and still a high component that stable.

Allison Aden: Was there any purchase accounting impact on gross margin associated with the Solitaire acquisition in this past quarter? Are we past that at this point? I'd say largely we're past that, it was a very, small amount. We're still selling that inventory off, but it's pretty insignificant at this point, Greg. Perfect. I will leave it there. Thanks.

Speaker Change: Okay and then my last one was just a more of a clarification was there any purchase accounting impact on gross margin associated with the Solitaire acquisition in this past quarter are we past that at this point.

Speaker Change: I'd say largely were passed out of it it was a small amount.

Speaker Change: Okay got it all in that inventory off but it's pretty insignificant at this point Gregg.

Gregg: Perfect I will I'll leave it there thanks.

Speaker Change: Thank you.

Operator: Thank you. Thank you one moment for our next question. Again, as a reminder to ask a question, you may press star 11 on your telephone. Our next question comes from the line of Jay McCanless of Wedbush. Your line is now open. Hey, good morning, everyone.

Speaker Change: Thank you one moment for our next question.

Speaker Change: Again as a reminder to ask a question.

Speaker Change: Press Star one on your telephone.

Speaker Change: Our next question.

Speaker Change: Comes from the line of Jay Mccanless with Wedbush. Your line is now open.

Jay McCanless: So the first question I had was shipments being down 12% in the quarter versus the industry being up nearly 15%. Can you talk about what's going on there? And what the plan is to maybe catch up and be back in line with the industry over the next couple quarters? Yeah, Jay, I think this is a really important question.

Speaker Change: Hey, good morning, everyone.

Jay McCanless: So the first question I had with shipments being down 12% in the quarter versus the industry being up nearly 15% can you talk about what's going on there.

Jay McCanless: And what the plan is to maybe catch up and be back in line with the industry over the next couple of quarters.

William C. Boor: Because I think there's noise and what people kind of see at a headline level. The first point I want to make is that if you really dissect the industry shipments, and you can do this with publicly available HUD shipment data. If you really dissect it and look at it on a regional basis, even though the industry was up, I think I'm talking year over year for this discussion, even though the industry was up, up 15%. Yeah, I think it was 14.7.

Speaker Change: Yeah, Jay I think this is a really important question.

Speaker Change: Because I think there is noise in what people kind of see at a headline level.

Speaker Change: First point I want to make is that if you really dissect the industry shipments and you can do this with.

Speaker Change: Publicly available HUD shipment data, if you really dissect it and look at it on a regional basis.

Speaker Change: Even though the industry was up I think I'm talking year over year for this discussion even though the industry was up.

Speaker Change: About 15% I think it was $14 seven months.

Speaker Change: When you look at it regionally.

William C. Boor: When you look at it regionally, the range of increases and decreases is more than you might expect. And just to give you a feel, the East-South-Central, which includes Tennessee, Alabama, Kentucky, Mississippi, just looking at the numbers here, that was up 50%. You contrast that to an area like East North Central, Illinois, Michigan, and Ohio, which was down 31%. So I'm belaboring the point, but if you dissect that, you really have to look at how any given manufacturer lines up with their exposure to those regions to get a clear picture of whether they, quote, stayed with the market or not. Now, setting that aside.

Speaker Change: The range of increases and decreases as more than you might expect.

Speaker Change: And just to give you a feel.

Speaker Change: The east South Central which includes Tennessee, Alabama, Kentucky, Mississippi, just looking at the numbers here that was up 50%.

Speaker Change: You contrast that to an area like east North Central, Illinois, Michigan, Ohio.

Speaker Change: Which was down 31%, so I'm belaboring the point, but if you dissect that you really have to look at how any given manufacturer lines up with their exposure to those regions.

Speaker Change: To get a clear picture of whether they stayed with market or not.

Speaker Change: Now setting that aside.

William C. Boor: To really understand the answer to your question, the other thing I'd say, and I'm again working year over year numbers, you need to look at both shipments and backloads. And when you do, you really get a clearer picture of what underlying demand is and a more normalized view of share is. So let's talk about last year.

Speaker Change: To really understand the answer to your question. The other thing I would say and I'm again working year over year numbers you.

Speaker Change: You need to look at both shipments and backlog changes.

Speaker Change: And when you do you really get a clear picture of what underlying demand and a more normalized view of share is.

Speaker Change: So let's talk about last year, let's remember, where we were in the industry last year the.

William C. Boor: Let's remember where we were in the industry last year. The context behind our shipments, Dan, we ship just roughly 4500 units. And during that quarter, our backlog dropped 180 million.

Speaker Change: The context behind our shipments than we shipped.

William C. Boor: So, if you remember, we were kind of in a really declining backlog environment. So, roughly 40% of our volume that quarter represented backlog depletion. Now this quarter was the opposite. We shipped about 3,900, a little over 3,900 units. [inaudible] So we shipped below the new order level. Why?

Speaker Change: This roughly 4500 units and during that quarter, our backlog dropped to $180 million. So if you remember we were kind of in a really declining backlog environment.

Speaker Change: So.

Speaker Change: Roughly 40% of our volume that quarter represented backlog depletion.

Speaker Change: Now this quarter was the opposite we shipped about.

Speaker Change: About 3900 little over 3900 units that.

Speaker Change: But our backlog grew $30 million.

Speaker Change: So we ship below the new order level why because again at the beginning we lost days due to a lack of backlog in certain plants.

William C. Boor: Because again, at the beginning, we lost days due to a lack of backlog in certain plants. So, I mean, that explains our year-over-year comparison in the context of underlying demand. You know, it's clearly stronger now.

Speaker Change: So.

Speaker Change: I mean that explains our year over year comparison.

Speaker Change: In the context of untrue lying demand. It is clearly stronger now with the remaining question is why didn't the overall HUD market showed the same trends right.

William C. Boor: But the remaining question is, why didn't the overall HUD market show the same trends, right? We don't have visibility into industry backlogs, but just, if you just divided our shipments last year by HUD shipments, it would have suggested a 21% market share. Frankly, that's higher than our share of capacity.

Speaker Change: We don't have visibility into industry backlogs, but just.

Speaker Change: If you just divided our shipments last year by HUD shipments.

Speaker Change: It would've suggested that 21% market share.

Speaker Change: Frankly, thats higher than our share of capacity is higher than our market share over time.

William C. Boor: That's higher than our market share over time. So the only thing that I can conclude from that is that while we were in the backlog and we're still shipping at a relatively high rate and depleting that backlog, others in the industry presumably didn't have the same backlog. They had kind of already hit a point where they had to start pulling back, so we outshipped the industry during that period of time. So I hope this isn't too lengthy. I'm trying. I think it's a really critical thing because I think it'd be easy to misunderstand this shipment comparison. So what's the point?

Speaker Change: So the only thing that I can conclude from that is that while we were had had the backlog and we're still shipping.

Speaker Change: At a relatively high rate and depleting that backlog.

Speaker Change: Others in the industry.

Speaker Change: Presumably it didn't have the same backlog they had kind of already hit a point, where they had to start pulling back so.

Speaker Change: So we out shift the industry in that period of time.

Speaker Change:

Speaker Change: So I hope this isn't too lengthy I'm trying I think it's a really critical thing because I think it would be easy to misunderstand. This shipment comparison, so what's the point when when you looked at both shipment and backlog changes you really get a more normalized view of underlying market share in underlying demand.

William C. Boor: When you look at both shipment and backlog changes, you really get a more normalized view of underlying market share and underlying demand. And despite the shipment numbers, our underlying demand is significantly greater now than it was a year ago. So now that plants, you know, going forward, this was a quarter with some transition, and I'm going to keep saying that because, again, you had a company like us that had to take some downtime at the beginning but then got back to higher schedules at the end.

Speaker Change: And despite the shipment numbers or underlying demand is significantly greater now than it was a year ago.

Speaker Change: Now that plant's going forward this was.

Speaker Change: Quarter, with some transition and I'm going to keep saying that because again you get a company like us that.

Speaker Change: I had to take some downtime at the beginning but then was getting back to higher schedules at the end. So once the industry kind of reestablish as a workable backlog.

William C. Boor: So once the industry kind of reestablishes a workable backlog, you're going to see the dynamics settle out, and you're going to see people reflect more consistent, if you want to call it market share type ratios. So, I hope that wasn't too much, and I'm happy to answer questions, but I really thought, you know, at face value, if people look at the year-over-year shipment numbers, I know that, in my opinion, you could really get off track just looking at those headlines. So, yeah, I threw a lot at you. Come back to me if you have questions, if any of that didn't make sense. No, it makes sense.

Speaker Change: Youre going to see the dynamics settle out and youre going to see people, reflecting more consistent through on it.

Speaker Change: Call it market share type ratios.

Speaker Change: I hope that wasn't too much and I'm happy to answer questions, but I really but at face value if people look at the year over year.

Speaker Change: Shipment numbers I know that in my opinion, you could really get off track.

Speaker Change: Just looking at those headlines.

Speaker Change: So Jeff threw a lot at you.

Speaker Change: <unk>.

Speaker Change: Come back at me if questions if any of that didn't make sense.

Jay McCanless: I guess the next one I had was, if you look at the rapid rise in the number of retail stores, is there anything we need to be cognizant of from a GAP accounting perspective in terms of those internal sales versus external sales? Maybe some of those shipments are getting hung up, but maybe not recognized yet until they are sold at retail. There's a little bit of that, and I could have added that to my long, complicated explanation, but I kind of felt like that was a little bit of a fringe issue for us. We certainly are more integrated if you just look at retail sales compared to our wholesale shipments. This set does create some changes, like you mentioned.

Speaker Change: It makes sense I guess the next one I had.

Speaker Change: If you look at if you look at the rapid rise in the number of retail stores.

Speaker Change: Is there anything we need to be cognizant of from from a GAAP accounting perspective.

Speaker Change: In terms of those internal sales versus external sales, maybe some of those shipments are getting not hung up but maybe not recognized yet until those are sold at retail.

Speaker Change: There is a little bit of that and I could have added that to my long complicated explanation, but I kind of felt like that was a little bit of a fringe issue for us. We we certainly are more integrated if you just look at retail sales compared to.

Speaker Change: Our wholesale shipments.

Speaker Change: That does create some changes like you mentioned, they're kind of moment in time changes in the overtime, we will work themselves through.

William C. Boor: They're kind of moment in time changes, and over time, they'll work themselves through. And, of course, it also changes things like, you know, average selling price, which is, you know, is a combination of retail and wholesale price for us. I think you're right. I just don't think it was a kind of a main event that we would have highlighted.

Speaker Change: And of course, it also changes things like.

Speaker Change: Average selling price, which is <unk>.

Speaker Change: A combination of retail and wholesale price for us.

Speaker Change: So I think Youre right I, just don't think it was a kind of a main event that we would have highlighted.

Jay McCanless: Well, that's good. That's good to hear. Thank you.

Speaker Change: Okay, well that's good that's good to hear thank you.

Speaker Change: And then I guess.

William C. Boor: And then, I guess, with the rise that we saw in mortgage rates in April. And then a little bit of a pullback in May. Would it be safe to say that demand, and I think based on the way you answered some of the other questions, that this is the case, but has the demand that you saw exiting 4Q continued into 1Q25? Yeah, we're definitely, if you take that snapshot in time at the end of the quarter transitioning into our first fiscal quarter, it was definitely, you know, definitely up. And I think that, you know, I'm, I apologize for repeating myself.

Speaker Change: With the rise that we saw in <unk>.

Speaker Change: Mortgage rates in April.

Speaker Change: And then a little bit of pullback in May I guess.

Speaker Change: Would it be safe to say that demand and I think based on the way you answered some of the other questions that this is the case, but has the demand that you saw exiting <unk> continued into <unk> 25.

Speaker Change: Yes, we are definitely if you take that snapshot in time at the end of the quarter transitioning into.

Speaker Change: Our first fiscal quarter it was definitely.

Speaker Change: Definitely up.

Speaker Change: And I think thats it.

William C. Boor: I just think that's noteworthy because we didn't get the rate improvement, right? In fact, and it split hairs because it was pretty mild, but rates ended the quarter, the fourth fiscal quarter, a little bit higher than they entered it. So to have that kind of.

Speaker Change: Apologize for repeating myself I just think that's noteworthy because we didn't get the rate improvement right in fact.

Speaker Change: And splitting hairs, because it was pretty mild but rates ended the quarter in the fourth fiscal quarter, a little bit higher than they entered it so to have that kind of <unk>.

William C. Boor: Demand will come through, you know, part of its spring selling season, but to have that kind of underlying demand come through without a boost in interest rate improvement, I think is really, Yeah, that is. And then when I think about inputs to gross margin, it sounds like you're going to get a little bit of a boost from potentially increased volume. But what about some of the other inputs, labor, OSB, some of those? I know there was some noise around OSB earlier in the year.

Speaker Change: Demand come through part of its spring selling season, but to have that kind of underlying demand come through without a boost in interest rate improvement I think is really noteworthy.

Speaker Change: Yes.

Speaker Change: Yes.

Speaker Change: And then when I think about inputs to gross margin.

Speaker Change: It sounds like Youre going to get a little bit of boost from potentially increased volume.

Speaker Change: What about some of the other inputs labor OSB some of those I know there was some noise around OSB earlier in the year. So any any color commentary you can give us on gross margin and Directionally. How you are feeling about that as we move into the next quarter.

William C. Boor: So any color commentary you can give us on gross margin and directionally how you're feeling about that as we move into the next quarter? So, I mean, essentially, we've seen Lombard and OLSB somewhat level off, but we continue to stay, obviously, close to that component of our gross margin as we move forward. But there's been just a little bit of volatility, so it is a little hard to predict. And then the next question I had, just maybe could you talk about where chattel rates are now and maybe versus last year at this time? Yeah, sure, Jay.

Speaker Change: So I mean essentially.

Speaker Change: We've seen lumber analysis be somewhat level off as we continue to stay obviously close to that component of gross margin as we move forward, but there has been just a little bit of volatility facilities. So it is a little hard to predict.

Speaker Change: Okay.

Speaker Change: And then the next question I had just maybe could you talk about where charter rates are now in.

Speaker Change: Maybe versus last year at this time.

William C. Boor: So right now, they're still in that low 9% range, so kind of a range of 9% to 9.4%. And then, if we look at, you know, kind of towards last year, it looks like they were in the high 8%. Okay, great. That is all I have for now. I'll get back in queue.

Speaker Change: Yesterday, so right now they are about still at that low 9% range, so kind of a range of 9% to $9 four.

Speaker Change: And then kind of if we look at kind of towards last year.

Speaker Change: It looks like they were in the high 8% range.

Speaker Change: Okay great.

Speaker Change: All I have for now I'll get back in queue. Thank you.

Jay McCanless: Thank you. Thanks, Jay. Please wait one moment for our next question. Our next question comes from the line of Daniel Moore of CJS Securities. Your line is now open.

Jay: Thanks Jay.

Speaker Change: Yes.

Speaker Change: Yes.

Speaker Change: Our next question.

Speaker Change: Our next question comes from the line of Daniel Moore of CJS Securities. Your line is now open.

Daniel Joseph Moore: Thank you. Thanks for taking the questions. Obviously, we covered a lot of them. I guess, first off, I'll just talk about ASPs. Are you seeing the trend of lower priced, maybe lower optioned homes continue, and what is your expectations for the direction of ASPs versus what we saw in Q4 for the next couple of quarters? You know, it's been kind of a surprisingly consistent story over the last couple months or last couple quarters. You know, I always first think about the same house selling out in the market, and across the entire landscape, I'd say we continue to see really pretty minor leakage of prices.

Speaker Change: Thank you thanks for taking the questions. Obviously, we've covered a lot of them.

Speaker Change #100: I guess first off maybe just talk about Asps are you seeing.

Speaker Change #100: The sort of trade down to lower priced maybe lower option homes continue and what was your expectations for the direction of Asps.

Speaker Change #100:

Speaker Change #100: Versus what we saw in Q4 for the next couple of quarters.

Speaker Change #100: Yes.

Ben: It's Ben.

Speaker Change #102: Kind of almost surprisingly consistent story over the last couple months or last couple of quarters.

You know I always first think about the same house selling out in the market and.

Ben: Across the entire landscape I'd say, we continue to see really pretty minor leakage of pricing.

William C. Boor: And I'm always trying to put it in context because it is, it has been, through our fourth quarter, kind of just a very slow reduction and still at a pretty high level. But as far as trade down, I think, you know, we definitely have seen the mixed shift to singles, which we kind of look at and say, well, some of that's probably people trading down. You know, I mentioned in my comments that, uh, you know, I think buyers are coming to terms with the home they can afford. It doesn't mean for everyone that you've got to go from a multi-section to a single section.

Ben: And I'm always trying to put a context because it is it has been.

Ben: Through our fourth quarter kind of just a very slow reduction.

Ben: And still at a pretty high level.

Speaker Change #103: But as far as trade down I think we definitely we definitely have seen.

Speaker Change #104: The mixed shift to singles, which we.

Speaker Change #104: Kind of looked at it and say well some of that is probably people trading down I mentioned in my comments that.

Speaker Change #105: You know I think buyers are coming to terms with the home. They can afford it doesn't mean for everyone that you've got to go from a multi section to a single section might just mean a reduction in options.

William C. Boor: It might just mean a reduction in options, um, or a different floor plan, but the trend towards single-person homes, I think, and it's not been dramatic, but that trend kind of indicates what you're mentioning and that people are kind of moving down. You know, we always talk about this and a couple different parts of the market at the intersection with, you know, a lower price, they're not low price, but a lower price site built home. We absolutely, you've heard me say it before, absolutely know, because of our own retail and our connection to our independent retailers.

Speaker Change #106: Or different floor plan, but the trends towards single thing and it's not been dramatic does that trend kind of indicates what youre mentioning and that people are kind of moving down.

Speaker Change #107: We always talk about.

Speaker Change #108: This in a couple of different parts of the market at the intersection with.

Speaker Change #108: Sure.

Speaker Change #109: Lower price Theyre, not low price the lower price site built home.

Speaker Change #110: We absolutely you've heard me say it before we absolutely know.

Speaker Change #111: Because of our own retail and our connection to our independent retailers. We know there are people that are considering and then many are buying no.

William C. Boor: We know there are people that are considering, and many are buying, you know, higher-priced manufactured homes rather than their site-built options at this point. But, you know, yeah, they're moving down a little bit even within the manufactured housing scope.

Speaker Change #112: Higher priced manufactured homes, rather than their site build options at this point.

Speaker Change #113: But yes, they are moving down a little bit even within the manufactured housing scope I think thats, all how they've been adjusting to interest rates and the impact on the monthly cost.

William C. Boor: I think that's all how they've been adjusting to interest rates and the impact on the monthly cost. Okay, and I appreciate the color on the community and community developers and kind of where we are and the expectation of an uptick later in the year. But aside, that is a static group; maybe just talk about dialogues, conversations, efforts you're having at expanding or increasing penetration, you know, into that, obviously, large category, even if orders are still a little quiet at the moment. Yeah, no, you don't stop your efforts to stay close to those folks.

Speaker Change #114: Okay and I appreciate that.

Speaker Change #115: Color on the community.

Speaker Change #116: The developers and.

Speaker Change #117: Kind of where we are in the expectation.

Speaker Change #117: A an uptick later in the year.

Speaker Change #118: But aside.

Speaker Change #119: That is a static group, maybe just talk about the dialogues conversations efforts, youre, having and expanding or increasing penetration.

Speaker Change #120: To that obviously, a large category even if we.

Speaker Change #121: Orders are still a little quiet at the moment.

Speaker Change #122: Yeah, No you don't stop your efforts to stay close to those folks and I think we we as a company see an opportunity really to continue to deepen relationships, there and get frankly get more business out of that group.

William C. Boor: And I think we, we as a company, see an opportunity really to continue to deepen relationships there and, frankly, get more business out of that group. It's really tightly connected to something we changed a couple years ago in our company. We previously had all of our plants with their own sales teams, which we still have, and they're the ones closest to the, You know, where the rubber hits the road.

Speaker Change #122: It's really tightly connected to.

Speaker Change #123: Something we changed a couple of years ago in our company. We had previously had all of our plants with their own sales teams, which we still have and they are the ones closest to the.

William C. Boor: But then we added a national sales team in manufacturing, and a component of that national sales team was a group that we're still continuing to build out focused on communities. And when I talk about communities, I've said this before, when we say communities, historically, we've always included other developers and land lease community operators kind of in that whole category.

Speaker Change #124: Where the rubber hits the road, but then we added a national sales team and manufacturing and a component of the national sales team was a group.

Speaker Change #125: We're still continuing to build out focused on communities and when I talk about communities I've said this before when we when we say communities historically, we've always included.

Speaker Change #125: Builder developers and landlords community operators kind of in that whole category. So we've definitely upped our our.

William C. Boor: So we've definitely upped our game as far as approaching that segment. And, you know, not only do we look forward to that segment coming back to the market, but we're looking forward to penetrate it a little bit better ourselves. And then you touched on this Bill of Prepared Remarks, but as orders have improved, would you prefer to let backlogs continue to build as we look out into fiscal Q1, or do you expect to ramp production in line with order rates?

Our game as far as.

Broaching that segment.

Speaker Change #126: And not only do we look forward to.

Speaker Change #127: That segment coming back to the market, but we're looking forward to penetrating a little bit better ourselves.

Speaker Change #127: And then.

Speaker Change #128: You touched on this bill prepared remarks, but.

Speaker Change #128: As orders.

Speaker Change #129: Have improved would you prefer to let back yet backlogs continue to build as we look out into fiscal Q4 do you expect to ramp production in line with order rates.

William C. Boor: From what we saw exiting the... Yeah, you know, I remember. I haven't heard this discussion too much in the last little bit. But I remember in years gone by, the questions always revolved around what would be the ideal backlog. And my answer was always, if you could lock one in, and it wouldn't change, you'd want it to be probably around six weeks. It gives you time to plan your production, and it gives you a quick delivery for the customer, which is an advantage of factory-built housing.

Speaker Change #129: From what we saw exiting the quarter.

Speaker Change #129: Yes.

Speaker Change #130: Remember I haven't heard this discussion too much in the last little bit, but our members in years gone by the questions always revolved around what would be the ideal backlog and my answer was always if you could lock one in and it wouldn't change you'd want it to be probably around six weeks.

Gives you time to plan your production. It gives you a quick delivery for the customer which is an advantage of factory built housing.

William C. Boor: Now we're actually a touch above that, and it's increasing, but really... [inaudible] So it's, we got it. The theme today is transition, right? We've kind of got the gambit as far as plants that are in a little bit different positions, but they're all, you know, generally, seeing the opportunity to increase production. We definitely, you know, if we can help it, we want to deliver homes. We don't want to see backlogs, go, you know, anywhere near what we've seen in the past couple of years. And seven to eight weeks on average is a pretty, pretty nice spot.

Speaker Change #130: Now we are actually a touch above that and it's increasing.

Speaker Change #131: But really.

Speaker Change #132: Instead of thinking about it as an entire system to answer your question more directly each one of our plants is in a little bit different situation. We have some that I think they really got to work hard to keep the backlogs from getting away from meaning getting too long and we've got others that are under that seven to eight week range that are still open to <unk>.

Speaker Change #133: Buildup to a more comfortable level, so we got it.

Speaker Change #134: The theme today is transition right, we've kind of got the gamut as far as plants that are in a little bit different position, but they are all.

Speaker Change #135: Generally they're all seeing the opportunity to increase production, we definitely if we can help it we wanted to deliver homes, we don't want to see backlogs.

So you know anywhere near what we've seen in the past couple of years and seven.

Speaker Change #135: Seven to eight weeks on average is a pretty pretty nice spot.

Daniel Joseph Moore: Great. I'm going to ask one or two more quickly that kind of question, but I'm not sure what the, if I have perfect clarity on the answer, so forgive me, but traffic and order rates at retail, how are they trending thus far in April and May? Have they picked up from where you left off at the end of fiscal Q1, given we're into a little bit stronger period? Yeah.

Great.

Speaker Change #136: I'm going to ask one or two more quickly that kind of asked but I'm not sure what the if I have perfect clarity on the answers so forgive me but.

Traffic and order rates at retail how are they trending thus far in April and May have they picked up from where you left left off at the end of fiscal Q1, given we're into it a little bit seasonally stronger period.

Speaker Change #136: Yeah.

William C. Boor: Yeah, I think you picked up my comment, so you can kind of try to shy away from giving too much of an update this quarter, but there was a trajectory in the fourth quarter, right, and that trajectory's, nothing's changed that trajectory. This is Whitson on the Upward Path, and I've kind of commented, even through the downturn, that traffic in retail has been pretty encouraging. You know, people didn't stop coming to retail stores.

Speaker Change #137: Yes, I think you did pick up my comments I kind of tried to shy away from giving too much of the update in quarter, but.

Speaker Change #138: There was a trajectory in the fourth quarter rate trajectories, nothing change that trajectory.

Speaker Change #139: This is still an upward path and I've kind of commented even through the downturn that traffic and retail has been pretty encouraging people didn't stop come into retail stores. They were just puzzling over how to make the purchase happen.

William C. Boor: They were just puzzling over how to make the purchase happen. One of the things we've certainly noticed recently is that even though traffic is already at a healthy rate and improving, we're getting higher conversion rates. And that's really what's changed. It's the conversion rate more than a huge uptick in the number of people that are visiting or calling. It's been a positive trend. Okay. Really helpful.

Speaker Change #140: One of the things we've certainly noticed recently is that even though traffic is already at a healthy rate.

Speaker Change #140: And improving we're getting a higher conversion rate.

Speaker Change #140: And that's really what's changed is the conversion rate more than a huge uptick in the number of people that are visiting or calling.

Speaker Change #140: But it's been a it's been a positive trend.

Speaker Change #140: Okay.

Daniel Joseph Moore: And then last for me is... We touched on the components of gross margin with utilization. Certainly improving, you know, as we exit the quarter and on that trajectory, is there any reason gross margins wouldn't be up a little bit? You know, is it? bottom line for the near term or are we just kind of staying away from that? Thanks again.

Really helpful. And then last for me is.

Speaker Change #141: We touched on the components of gross margin with <unk>.

Speaker Change #141: Utilization.

Speaker Change #142: Certainly improving.

Speaker Change #143: As we exit the quarter and on that trajectory is there any reason gross margins wouldn't be up a little bit.

Speaker Change #144: Is it sort of a bottom for the for the near term.

Speaker Change #145: Or are we just kind of staying away from that thanks again I appreciate it.

Allison Aden: Yeah, I mean, I would say that, as we've talked about before, on gross margins, it is fairly hard to predict. And we did. You know, you're right.

Speaker Change #146: Yes, I would say that isn't talked about before on the gross margins is failure to predict and we did.

Allison Aden: And despite a small reduction that we had in ASP this quarter, we were able to maintain the gross margin for the housing segment at twenty-two point four percent. So consider, you know, we continue to stay close to the price and pressure on price and continue to stay focused on watching commodity pricing and really managing a variable cost. So you see a lot of consistency in both the utilization of the ASP and in our ability to, you know, keep our costs on the variable cost structure.

Speaker Change #147: You're right and despite a small reduction that we had in ASC and this quarter, we were able to maintain the gross margin.

Speaker Change #148: For the household segment in 2018, 4% so.

Speaker Change #150: We continue to stay close to the price and the pressure on price and we'll continue to stay focused on watching the commodity pricing and really managing that available cost. So you've seen a lot of consistency in both the utilization and the ESP.

Speaker Change #149: No need to.

Speaker Change #151: Keep our costs on a variable cost structure and thats fairly consistent margins.

Allison Aden: And that's resulted in fairly consistent margins over the last three quarters. Okay, thanks again, appreciate the color and... Congratulations on putting the investigation fully to bed. It was a long road, and the efforts are appreciated. Thanks a lot, Dan.

Speaker Change #149: Last three quarters.

Speaker Change #149: Okay.

Speaker Change #152: Thanks again appreciate the color.

Congrats on putting the investigation to final fully too bad for them.

Speaker Change #152: Yeah.

Speaker Change #152: Okay.

Speaker Change #153: A long road and greatly efforts are appreciated and that is the transparency. Thank you again.

Dan: Thanks, a lot Dan.

Daniel Joseph Moore: Thank you one moment for our next question. Our next question comes from the line of Michael Chapman of Aviance Capital Partners. Your line is now open.

Dan: Thank you William for next question.

Dan: Okay.

Dan: Our next question comes from the line of Michael Chapman of Avions Capital Partners. Your line is now open.

Michael Chapman: Thanks. I guess everybody's kind of focused on the shorter term. I guess it's a question more about kind of the longer term corporate strategy around retail and kind of cap to finance. You mentioned conversion rates are going up, and that's helping, and I would assume internally that conversion rates are something that you would like to see increase. Obviously, you mentioned buy-downs of interest rates to help that. When you're thinking out, you know, three to five years, is the retail build-out what helps you get closer to the customer and increase conversion rates?

Speaker Change #155: Thanks, I guess, everybody is kind of focused on the shorter term I guess kind of a question more about kind of the longer term.

<unk> strategy around retail and kind of captive finance you mentioned conversion rates are going up and thats, helping and I would assume internally conversion rates or something that you would like to see increase obviously.

Michael Chapman: And is there a need to have a bigger cap on the finance component so that you can be even more efficient? more adept at converting the customers at the end, and any thoughts around how you think that plays out for you guys over the next couple years? I'd really appreciate it.

Speaker Change #155: You didn't mention of buy downs of interest rates to help that.

Speaker Change #156: When youre thinking out three to five years is the retail.

Speaker Change #156: Build out what helps you get closer to the customer and increase conversion rates and is there a need to have a bigger captive finance components. So that you can you can be even.

Speaker Change #157: More adept at converting the customers at the end and any thoughts around how you think that plays out for you guys over the next couple of years I'd really appreciate it.

Speaker Change #158: Yeah, let me try to tackle that you could tell me if I leave anything out.

William C. Boor: Yeah, let me try to tackle it. You could tell me if I leave anything out. One thing I'd say about our strategy with retail in general or with distribution is that we are perfectly happy working with independent dealers in close relationships. We've got so many good relationships out there that have been going on for a long time. And we work with them, even on our digital marketing project that we've talked about over time, or not a project, but our work in digital marketing.

Speaker Change #158: The.

Speaker Change #159: One thing I'd say about our strategy with retail in general or with distribution is that we.

Speaker Change #160: We are perfectly happy working with independent dealers and close relationships. We've got so many good relationships out there that have been going on for a long time, and we work with them, even our digital marketing project that we've talked about over time or a project, but our work in digital marketing.

William C. Boor: A lot of that has been focused on actually giving tools to our independent dealers to help them get leads and help them have closer real-time information about our products and quicker response time. So we don't really, you know, I've said this a number of times, when we think about company-owned retail, it's basically, we will expand into company-owned retail when we look at one of our plants and have long-term concerns about access to the market.

Speaker Change #160: A lot of that has been focused on actually giving tools to our independent dealers.

Speaker Change #161: To help them get leads and help them have.

Speaker Change #162: Closer to real time information about our products and quicker response times. So we don't really know I've said this a number of times when we think about company owned retail.

Speaker Change #162: It's.

Speaker Change #163: It's basically we will expand in the company owned retail when we looked at one of our plants and have long term concerns about access to market.

William C. Boor: If the solution is to greenfield or buy a retailer in that area and own it, we're more than happy to do it. But it's not really a driver for us to, you know, grow retail in its own right outside of that strategic reason. And again, that's because we're so comfortable with independence. So I think we can get just as close to the customer with digital marketing and tight relationships with retailers if they're independent, frankly, as we can and so on. Maybe that's a little bit of an overstatement, but I think it's generally true.

Speaker Change #164: If the solution is to greenfield or by a retailer in that area and own it we're more than happy to do it.

Speaker Change #165: But it's not really a driver to us too.

Speaker Change #166: Grow retail in its own right outside of that strategic reason.

Speaker Change #167: Again, thats because were so comfortable with the independents. So I think we can get just as close.

Speaker Change #168: To the customer with digital marketing and tight relationships with retailers if they are independent.

Speaker Change #169: Frankly, as we can and store, maybe that's a little bit of an overstatement, but I think it's generally true.

William C. Boor: On financing... And we're always looking at this. We have talked for a number of years now when people talk to us about capital allocation, that we've got a healthy balance sheet, and we're always kind of looking at the balance of whether putting more capital into our lending business makes sense. And why would it make sense?

Speaker Change #170: On financing.

William C. Boor: Well, on the commercial side, it would make sense if one of our dealers needed floor plan lending and we thought we could provide it, and that would strengthen our relationship. And so we've done that for a long time, and we'll continue to do it, and we'll expand it if that's what the market kind of indicates is the best opportunity. And on the consumer side, our country place mortgage has been doing consumer loans for, I think, 25 years.

Speaker Change #171: And we're always looking at this we've talked for a number of years now when people talk to us about capital allocation that we've got a healthy balance sheet and we're always kind of looking at the balance of whether putting more capital allocation to our lending business makes sense and why would it make sense well in the <unk>.

Speaker Change #172: Actual side it would make sense if.

Speaker Change #173: If one of our dealers needed floor plan lending and we thought we could provide it and that would strengthen our relationship and so we've done that for a long time and we will continue to do it and we will expand it if that's what the market kind of indicates is the best opportunity and on the consumer side, our country place mortgage has been doing consumer loans for I think 25 years.

William C. Boor: So it's kind of the same story that we haven't traditionally leveraged that in a big way to do things like rate buy-downs to increase turns, but it's a tool we have. And so, you know, we love our position both on commercial and consumer lending. And we're more than willing to lean in on that if that's what we think the opportunity is at any given point in the market. And I think we've got machines on that side of the business that can really support our manufacturing business as well. So, really, let me know if I didn't touch on all aspects of your question. It was a good question. Yeah. No, that's helpful. I mean...

Speaker Change #172: <unk>.

Speaker Change #174: So it's kind of the same story that we haven't traditionally levered that.

Speaker Change #175: Big way to do things like rate buy downs to increase turns.

Speaker Change #176: It's a tool we have and so we're kind of we love our position both on commercial and consumer lending.

Speaker Change #176: We're more than willing to lean in on that if that's what we think the opportunity is at any given point in the market and I think we've got.

Speaker Change #176: Gene on that side of the business that can really support our manufacturing business as well.

Speaker Change #177: So really let me know if I didn't touch on all aspects of your question was good question yes.

Speaker Change #178: Thats helpful.

Michael Chapman: This is looking like we're close to the bottom. Your gross margins are a lot better now than they were, you know, during the last couple of downturns. And I think that's why the industry has consolidated. You guys have gotten better at what you do, but that gives you more flexibility. And then to your point, given how clean your balance sheet is, I would think that, you know, there's no need to run your gross margins up to 26, 27 if you can increase the velocity through your plants and actually get gross margins by just increasing the turns. And that's kind of where I'm getting at, is with that flexibility, what are the levers?

Speaker Change #179: This is looking like we're close to the bottom your gross margins are a lot better now than they were.

Speaker Change #180: Last couple of downturns and I think thats. The industry has consolidated you guys have gotten better at what you do but that gives you more flexibility and then to your point given how clean your balance sheet is.

Speaker Change #181: I would think that there is no need to run your gross margins up to 'twenty six 'twenty seven if you can increase the velocity through your plants and actually get gross margins by just increasing the turns.

Speaker Change #181: And that's kind of where I'm getting at is is with that flexibility what are the levers and you kind of mentioned it that you can pull to do that.

William C. Boor: And you kind of mentioned it, that you can pull to do that. You're tight with your independent dealer channel, and obviously, you can do buy-downs and other stuff like that. But I think from an investor standpoint, we're always looking at, you know, what's happening with site-built homes, and they seem to be able to get, you know, pretty good conversion rates and bring in traffic. And the idea would be, what are the things that you can do to get onto a similar trajectory that those guys have been on? Because it seems like financial flexibility should allow you to try a bunch of different things.

Speaker Change #182: Youre tight with your independent dealer channel and obviously, you can do by downs and other stuff like that but I think from from an investor's standpoint, we're always looking at.

Speaker Change #182: What's happening in the industry and the site built homes and they seem to be able to get pretty good conversion rates and bring in traffic and the idea would be what are the things that you can do to get onto a similar trajectory that those guys have been on because it seems like financial flexibility should allow you to try a bunch of different things.

Michael Chapman: And so if you have or are planning, what those would be to allow you to increase the velocity would be helpful for us to know as investors. Yeah, and I guess I would kind of tell you that, you know, the lending space is clearly an active space in our industry. And so we'll try things sometimes on a smaller scale that probably never kind of reach the radar screen.

If you have or or are planning.

Speaker Change #182: What those would be to allow you to increase the velocity would be helpful for us to know as investors.

Yeah, and I guess I would tell you that.

The lending space is clearly enacted space in our industry and so on.

Speaker Change #183: We will try things, sometimes on a smaller scale that probably never reach the radar screen.

William C. Boor: But it's all in kind of testing and figuring out what we think the right decision at the time is. If we went back, and this isn't true for now, but it's kind of more of a strategic question you're asking, if we went back when the retailers were having big inventory challenges, Frankly, I think it would have been a little bit foolish for us to think we could increase turns by, for example, doing a commercial lending program because the orders weren't out there to be had. You would have been kind of throwing away money

Speaker Change #183: But it's all in kind of testing and figuring out what we think the right decision at the time is.

Speaker Change #184: If we went back and this isn't true for now, but it is kind of more on the strategic question Youre asking if we went back when the retailers were having big inventory challenges.

Speaker Change #185: Frankly, I think it would have been a little bit foolish for us to think we could increase turns by for example, doing a commercial lending program because the orders weren't out there to be had you would've been kind of throwing away money.

William C. Boor: Now we're in a different situation, but we're on an upswing. So you have to decide, is the market giving us as much as we need so that we can keep backlogs in the right range in a given plant, or would it help to kind of boost that a little bit?

Speaker Change #185: Now we're in a different situation, but we are on an upswing. So you have to decide as the market given us as much as we need so that we can keep backlogs in the right range in a given plant.

Speaker Change #186: Would it help to kind of boost that a little bit. So those are the kinds of discussions that are always going on here one thing I'm really happy about and the company is that.

William C. Boor: So those are the kind of discussions that are always going on here. One thing I'm really happy about in the company is that the leaders of all those operations are in very close contact, frankly, daily, if not weekly, if not daily with leaders at our MH site.

Speaker Change #187: The leaders of all of those operations are our lending leader is in very close contract contact.

Speaker Change #188: Frankly daily if not weekly if not daily with leaders in our MH side, and so I think the team has really come together in a way where they can optimize these kind of issues.

William C. Boor: And so I think the team has really come together in a way where they can optimize these kinds of issues. But is there the ability to increase capital on the lending side to increase conversion rates, or isn't it? That's kind of concurrent with what happens in the market. But is that something that you can do to increase the velocity through there by having more financing available, either floor plan or other for you guys?

Speaker Change #189: Is there ability to increase capital to the lending side to increase.

Increased conversion rates.

Speaker Change #189: That's kind of concurrent with what happens in the market, but is that something that you can do to.

Speaker Change #189: Increase the velocity through there by having more financing available either floorplan or other for you guys or is that kind of like you've mentioned there are small things you can do but they are under the radar that it doesn't make sense to throw big amounts of money at that because the cost benefit is not there and so strategically there'll be changes on the margin but.

William C. Boor: Or is that kind of, like you've mentioned, there are small things you can do, but they're under the radar so it doesn't make sense to throw large amounts of money at them because the cost-benefit's not there. And so, strategically, there'll be changes on the margin, but nothing that is imminently noticeable from the outside. Yeah, so that what I was mentioning there is all part of your ear to the ground and trying to figure out what's going to be the best tradeoff at any given point in time. But to your question, can we allocate capital to it? Sure.

Speaker Change #190: Nothing nothing that is eminently noticeable from the outside.

Speaker Change #191: Yes, so what I was mentioning there is all part of an ear to the ground and trying to figure out what's going to be the best tradeoffs I didn't given point in time, but to your question can we allocate capital to ensure I mean, thats why we have such a strong balance sheet. So.

Michael Chapman: I mean, that's why we have such a strong balance sheet. So, you know, if we saw the need to go out with more lending on the commercial or the consumer side, we absolutely have the firepower to do it. But, from a company strategy perspective, we're a core business as a manufacturer. Right. And we don't want our balance sheet to become a lending balance sheet.

Speaker Change #192: If we saw the need to.

Speaker Change #193: Go out with more lending on the commercial or the consumer side, we absolutely have the firepower to do it.

Speaker Change #194: From from a company strategy perspective, we're our core business as a manufacturer right.

Speaker Change #194: And we don't want our balance sheet to become a lending balance sheet. So we're also conscious of that and conscious of why people invest in us we absolutely have the ability if there was a competitive situation to.

William C. Boor: So we're also conscious of that and conscious of why people invest. We absolutely have the ability, if there was a competitive situation, to kind of swing some capital over to the lending side and either act aggressively or protect our end. Great. I appreciate it. Thanks for the time.

Speaker Change #194: Kind of swing some capital over to lending side in either act aggressively or protect our interests.

Speaker Change #195: Okay, Great I appreciate it thanks for the time.

Michael Chapman: Yes, good questions. Thank you. Thank you, one moment, for our next question. Our next question comes from the line of Jay McCanless of Woodbush. Your line is now open. Hey, thanks for taking my follow-ups. The first one: what was the share repurchase authorization at the end of fiscal 24? How much did y'all have outstanding?

Speaker Change #196: Yes my questions. Thank you.

Speaker Change #196: Thank you Amit for next question.

Speaker Change #196: Our next question comes from the line of Jay Mccanless Wedbush. Your line is now open.

Jay McCanless: Yeah, so outstanding at the end of 2024, we have 126.4 million remaining on the authorization. 126.4. I was finishing up one and then remembered the board gave us an additional hundred million even as we were finishing up the last one. Got it.

Hey, Thanks for taking my follow ups the first one.

Speaker Change #197: What was the.

Speaker Change #198: Share repurchase authorization at the end of the.

Jay McCanless: Fiscal 'twenty four how much in July is outstanding.

Speaker Change #199: Yes, so outstanding at the end of 2024, we have a $126 4 million.

Speaker Change #200: Mainly on the authorization.

Speaker Change #200: $126 four.

Yes, sure that was finishing up one and then remember the board gave us an additional $100 million, even as we were finishing up the last.

Allison Aden: And still opportunistic on that, or how are you thinking about repurchases for this year? We stay consistent in our capital allocation strategy, and as we touched on during the call, first and foremost, we like to put our, you know, dollars into our plan improvement, expansion of efficiency, and effectiveness. Also, we stay active, as you've seen historically, in the M&A market. And then we really, you know, continue to, as Phil just mentioned, an ongoing evaluation of opportunities in our lending operation. We really use the share repurchases as a balance, as a way to really responsibly balance the cash that we have and responsibly manage the balance sheet.

Speaker Change #200: Got it.

Speaker Change #201: Still opportunistic on that or how you're thinking about repurchase for this year.

David: Thank you, David consistent and our capital allocation.

Speaker Change #203: During the call and first and foremost we like that.

Speaker Change #204: The dollars into our plant improvement expansion of efficiency and effectiveness hopefully stay active and <unk> seen historically in the M&A market.

Speaker Change #205: Then we really are.

Speaker Change #205: Continue to as Phil just mentioned an ongoing evaluation of opportunities in our lending operation, we really use the share repurchases and the balance is a way to really responsibly balance out of the cash and we haven't and responsibly manage the balance sheet. So you have seen historically when we're in the market.

Jay McCanless: So you've seen historically when we're in the market, and sometimes, you know, we'll deviate from quarter to quarter just based on activity that we're seeing in the marketplace and also embedding opportunities in some of our M&A pipeline. And so then going back to industry shipments in the first quarter of calendar 24, I mean, who's taking volume at this point? Is it the larger manufacturers, or who do you guys think was driving that plus 15 for the quarter? Jay, it kind of goes back to my long winded answer that I think the regions are really what you'd have to dig into.

Speaker Change #206: Infill tons.

Speaker Change #207: We will.

Speaker Change #208: Deviate from quarter to quarter just based on.

Speaker Change #209: Activity that we're seeing in the marketplace and also on betting opportunities at some of our M&A pipeline.

William C. Boor: I think it was more a regional story than it was one manufacturer taking, And a quarter isn't a long time for variations in those kind of numbers. So if I would give you any kind of trend, we touched on one of the other questions. But the products that are moving the best are the lower priced ones. So you've got regional differences and then a general movement toward lower price point homes. So any plant that is positioned in a region that had good growth and was positioned at lower price points was kind of in the sweet spot for that limited period of time.

Okay.

Speaker Change #209: And so then going back to the to the industry shipments in the first quarter of calendar 'twenty four.

Speaker Change #210: I mean, who is taking volume at this point is that the larger manufacturers or who I guess, who do you guys think what's driving that plus 15 for the quarter.

Speaker Change #211: Hey, Jay it kind of goes back to my my long winded answer that I think the regions are really where you would have to dig into I think it was more a regional story than it was one manufacturer taking and.

Speaker Change #212: A quarter isn't a long time for variations in those kind of numbers. So if I would give you any kind of trend we touched on one of the other questions.

Speaker Change #213: The products that are moving the best are the lower price points.

Speaker Change #213: So you've got regional differences and then a general movement towards lower price point homes, so any any plant.

Speaker Change #214: That is positioned in a region that had good growth in <unk> was positioned at lower price points was kind of in the sweet spot for that limited period of time.

Jay McCanless: But I don't think I don't think you're seeing material shifts in market share just based on the data that you were looking at. And then the last one I was going to ask, it sounds like there still is a little bit of pricing pressure out there. And kind of the same question as before, is that something that you're seeing the larger players, everyone trying to compete for price, or is this more the smaller, more regional players where you're having to be more aggressive on your pricing to be competitive?

Speaker Change #215: But I don't think I don't think Youre seeing.

Speaker Change #216: Serial shifts in market share just based on the data that you were looking at.

Speaker Change #217: And then the last one I was going to ask it sounds like Theres still is a little bit of pricing pressure out there.

Speaker Change #218: And kind of the same questions before is that something that youre seeing the larger players everyone trying to compete for price or is this more smaller more regional players that where you are having to be more aggressive on your pricing to be competitive.

William C. Boor: Yeah, well, I think one reason why we haven't seen bigger reductions in price in this downturn is that we really haven't seen anyone getting into finance, Presumably got pretty good gross margins and coming off some very strong earnings years. So people haven't been [inaudible] You know, the pricing reductions that we've seen are kind of, Very episodic, and kind of very location oriented. Whether it's big players or small, I don't think I could generalize about that.

Speaker Change #218: Yes, well I think one reason why we haven't seen bigger reductions in price and this downturn is that we really haven't seen anyone getting get into financial distress right everyone's still.

Speaker Change #219: Presumably got pretty good gross margins and coming off some very strong earnings year. So people haven't been.

Speaker Change #220: Desperate and a sense of financial distress, we haven't had that activity but.

Speaker Change #220: But.

Speaker Change #220: The pricing reductions that we've seen are kind of.

Speaker Change #220: Very episodic and very location oriented.

Whether it's big players are small I don't think I could generate our generalize about that.

William C. Boor: And it's been modest. It really has been. I think if we see the order trends that we've talked a lot about on this call, then I think that kind of takes some of the motivation out of even that small amount of leakage. Okay. Well, so to paraphrase, and please correct or change this if I need to, but it sounds like the industry, in general, is behaving pretty well on price, but everyone is having to figure out ways to find affordability for their customers. Is that the right way to think about it? Sure, and a lot of that is in the retail store trying to get them to the right product. All right, then. Got it, got it.

Speaker Change #220: And it's been modest.

Speaker Change #220: Yes.

Speaker Change #220: Okay.

Jay McCanless: Okay, great. Thanks for taking my follow-up. Thanks, Jay. Thank you.

Speaker Change #220: Let's say if we see the we see the order trends that we've talked a lot about on this call than.

Speaker Change #220: And I think that kind of take some of the motivation out of even that small amount of leakage away.

Speaker Change #220: Okay.

Speaker Change #220: So.

<unk> please.

Speaker Change #221: Fixed route change this if I need to but it sounds like the industry in general is behaving pretty well on price but.

Speaker Change #222: Everyone is having to figure out ways to find affordability for their customers is that is that the right way to think about it.

Speaker Change #223: Sure and a lot of that is in the retail store trying to get them to the right product.

Speaker Change #223: Alright got it.

Speaker Change #224: Got it got it okay, great. Thanks for taking my follow ups.

Thanks Jay.

Speaker Change #224: Thank you I'm showing no further questions at this time I would now like to turn it back to Bill Boor, President and CEO for closing remarks.

Operator: I'm showing no further questions at this time. I would now like to turn it back to Bill Boor, President and CEO, for closing remarks. I know we're running short on time, and I appreciate everyone's interest in a good discussion. There's no doubt we will look back on fiscal 24 as a down year, but I wanted to share one reflection that I had when I was kind of looking over our results. Despite the down market resulting in our plant system running at a significantly reduced pace all year long, not only was this the third highest net income year in our history, but it more than doubled the income from three years ago, which was a record at the time.

William C. Boor: I know, we're running short on time and I appreciate everyone's interest in the good discussion.

William C. Boor: So there is no doubt we look back on fiscal 'twenty four is a down year, but I wanted to share one reflection that I had when I was kind of looking over our results.

Speaker Change #225: Despite the down market, resulting in our.

Speaker Change #226: Our plant system running at a significantly reduced pace all year long.

Speaker Change #227: Not only was this the third highest net income year in our history of more than doubled the income from three years ago, which was a record at the time.

Speaker Change #228: So I think just putting it in perspective, we've come a long way and with expectations of improving conditions in front of us.

Speaker Change #229: We feel like we're in a great position to deliver more homes than ever before so.

Speaker Change #230: Thank you all as always for your interest in <unk> and we look forward to keeping you updated on our progress.

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

Okay.

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Speaker Change #230: Sure.

Yes.

Speaker Change #230: Okay.

Speaker Change #231: Good day, and thank you for standing by welcome to the fourth quarter of fiscal year 2020 for Casco industry earnings call. At this time, all participants are in listen only mode.

William C. Boor: So I think just putting it in perspective, we've come a long way, and with expectations of improving conditions in front of us, I really feel like we're in a great position to deliver more homes than ever before. So, thank you all, as always, for your interest in Cavco, and we look forward to keeping you updated on our progress. Thank you for your participation in today's conference. This has concluded the program.

Speaker Change #231: Speaker's presentation there'll be a question and answer session to ask a question during the session you need to press star one when our telephone Jordanian Army message advising Johannes race to withdraw your question. Please press star. One again, please be advised that today's conference is being recorded I would now like to hand, the conference over to your first speaker today, Mark Buster corporate controller and Investor Relations. Please go ahead.

William C. Boor: You may now disconnect. ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? Good day, and thank you for standing by. Welcome to the fourth quarter fiscal year 2024 Cavco Industry Earnings Call. At this time, all participants are on listen-only mode.

Operator: After this speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 1-1 on your telephone. You'll then hear an automated message advising your hand is raised.

Operator: To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I'd now like to hand the conference over to your first speaker today, Mark Fusler, Corporate Controller, Investor Relations. Please go ahead.

Mark Fusler: Good day, and thank you for joining us for Cavco Industries' fourth quarter and fiscal year 2024 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 Bigbee, Chief Accounting Officer. Before we begin, we'd like to remind you that comments made during this conference call by management may contain forward-looking statements, including statements of expectations or assumptions about Cavco's financial and operational performance, revenues, earnings per share, cash flow or use, cost savings, operational efficiencies, current or future volatility in the credit markets, or future market conditions.

Speaker Change #231: Good day, and thank you for joining us for capital industries fourth quarter and fiscal year 2024 earnings conference call. During this call you'll be hearing hearing from Bill Boor, President and Chief Executive Officer, Allison Aden Executive Vice President and Chief Financial Officer, and Paul <unk>, Chief Accounting Officer.

Mark Fusler: All four-looking statements involve risks and uncertainties that could affect Cavco's actual results and could cause its actual results to differ materially from those expressed in any forward-looking statement made by or on behalf of Cavco. I encourage you to review Cavco's 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 any forward-looking statement.

Speaker Change #232: Before we begin we'd like to remind you that 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 or use cost savings operational efficiencies.

Speaker Change #232: Current or future volatility in the credit markets or future market conditions.

Speaker Change #233: All forward looking statements involve risks and uncertainties, which could affect cap those 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 capital.

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.

Speaker Change #233: Identify specific factors that may cause actual results or events to differ materially from those described in any forward looking statements.

Mark Fusler: This conference call also contains time-sensitive information that is accurate only as of the date of this live broadcast, Friday, May 24, 2024. Cavco undertakes no obligation to revise or update any forelooking 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?

This conference call also contains time sensitive information and is accurate only as of the date of this broadcast Friday may 24 2024.

Speaker Change #233: <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.

Speaker Change #233: Now I'd like to turn the call over to Bill Boor, President and Chief Executive Officer.

William C. Boor: Thanks, Mark. Welcome, and thank you for joining us today to review our fourth quarter results. The fourth quarter was the transition quarter we were looking for. Coming out of the holidays, we had a number of plants on four-day schedules, four-day-a-week production schedules, and several took extended holiday shutdowns in January due to low backlogs at the time. Those initial loss production days at the beginning of the quarter drove our essentially flat sequential wholesale shipment.

William C. Boor: Thanks, Mark welcome and thank you for joining us today to review our fourth quarter results.

William C. Boor: The fourth quarter was the transition quarter, we were looking for coming out of the holidays. We had a number of plants on a four day schedules four day, a week production schedules and several took extended holiday shutdowns in January due to low backlogs at the time.

William C. Boor: Those initial lost production days at the beginning of the quarter drove our essentially flat sequential wholesale shipments.

William C. Boor: During the quarter, though, order rates strengthened, and almost all of our plants have now worked their way back to five-day schedules and begun increasing their daily production. We saw the first quarter-to-quarter backlog increase since the downturn began, which is what we were looking for to indicate that buyers are continuing to return to the market. We had hoped this would be facilitated by declining mortgage rates, but as you know, that didn't happen. But still, buyers are returning because they need homes. They're adjusting to the higher rates, and they're adjusting their expectations around the home they can afford.

William C. Boor: During the quarter, though.

Speaker Change #234: Order rates strengthened in almost all of our plants have now worked their way back to five days schedules and began increasing their daily production rates.

Speaker Change #235: We saw the first quarter to quarter backlog increased since the downturn began which is what we're looking forward to indicate that buyers are continuing to return to the market.

Speaker Change #236: We had hoped this would be facilitated by declining mortgage rates, but as you know that didn't happen.

Still buyers are returning because they need homes. They are adjusting to the higher rates and they're adjusting their expectations around the home they can afford.

William C. Boor: On a same plant basis, orders continued their sequential improvement for the sixth straight quarter. It hasn't been dramatic, but it has been consistently improving despite the lack of rate relief noted earlier. Within the context of what I've said here, our capacity utilization for the quarter was consistent with the last few at approximately 60%. However, given the downtime earlier in the quarter, the takeaway is that we left the quarter at a higher utilization than we started, regarding backlog improvement.

Speaker Change #236: On a same plant basis orders continued their sequential improvement for the sixth straight quarter. It hasnt been dramatic but it has been consistently improving despite the lack of rate relief noted earlier.

Speaker Change #237: Within the context of what I've said here our capacity utilization for the quarter was consistent with the last few at approximately 60%.

Speaker Change #237: However, given the downtime earlier in the quarter. The takeaway is that we left the quarter at a higher utilization than we started.

Speaker Change #238: Regarding the backlog improvement.

William C. Boor: We ended the quarter with $191 million, up from $160 million in Q3. Pricing in the backlog was basically flat, so this represents a unit backlog improvement of roughly 20%. At quarter end, we had about seven to eight weeks in the backlog. Despite a small reduction in average selling price, we were able to maintain gross margin in the housing segment at 22.4%, which was flat compared to gross margin last quarter.

Speaker Change #239: We ended the quarter with $191 million up from $160 million in Q3.

Speaker Change #240: Pricing in the backlog was basically flat. So this represents a unit backlog improvement of roughly 20%.

Speaker Change #241: At quarter end, we had about seven to eight weeks in the backlog.

Speaker Change #242: Despite a small reduction in average selling price we were able to maintain gross margin in the housing segment at 22, 4%.

Speaker Change #242: Which was flat compared to the same.

Speaker Change #243: The gross margin last quarter.

William C. Boor: I know there's continuing interest in understanding the status of community orders. We've discussed this for several quarters, having said that we expect it to take a few quarters into calendar 2024 to really see meaningful improvement. However, community orders are still lagging.

Speaker Change #244: I know there is continuing interest in understanding the status of community orders. We've discussed this for several quarters, having said that we expect it to take a few quarters into calendar 2024 to really see meaningful improvement.

Speaker Change #245: Community orders are still lagging every community has its own story, so improvement will happen over a period of time.

William C. Boor: Every community has its own story, so improvement will happen over a period of time. Our expectation remains that community orders will improve this calendar year as inventory levels come down. The order strength we've seen thus far has primarily come from retail dealers, so the order boost from communities is still ahead. Commenting on the fiscal year, our teams across operations, including retail and financial services, really showed their ability to react quickly and effectively to market dynamics.

Our expectation remains that community orders will improve this calendar year as inventory levels come down.

Speaker Change #247: The order strength, we have seen thus far has primarily come from retail dealers. So the order boost from communities is still ahead.

Speaker Change #246: Commenting on the fiscal year, our teams across operations, including retail and financial services really showed their ability to react quickly and effectively to market dynamics.

William C. Boor: Despite the slowdown, we've maintained healthy margins, profitability, and cash flow. Now, as we increase schedules, our operators are ramping production rates in an effort to keep backlogs in check. This is the nature of the industry, and the ability to adapt quickly is being shown throughout our operation. I want to take a few minutes to comment on the year we just completed and some really important accomplishments. Our stated objective when the market got hit with rapid interest rate increases was not only to effectively manage the cycle but to stay focused on our priorities so we would come out of the down cycle stronger and even more prepared to supply homes to deserving families.

Speaker Change #246: Despite the slowdown we maintained healthy margins profitability and cash flows.

Speaker Change #248: Now as we increase schedules are operators of ramping production rates in an effort to keep backlogs and check.

Speaker Change #248: This is the nature of the industry and the ability to adapt quickly is being shown throughout our operations.

I wanted to take a few minutes to comment on the year, we just completed and some of the really important accomplishments. Our stated objective as the market got hit with rapid interest rate increases was not only to effectively manage this cycle, but.

Speaker Change #249: But to stay focused on our priorities. So we would come out of the down cycle stronger and even more prepared to supply homes to deserving families.

William C. Boor: First and foremost, our plants continued an impressive improvement in our safety results. This fiscal year, our total recordable injury rate was reduced 37%, continuing a multi-year trend of significant improvement, and in calendar 2023, we experienced a 35% lower incident rate compared to the industry benchmark. We also grew our retail footprint by adding 15 stores in the fiscal year after growing 19 stores in fiscal year 23. This growth is in support of our plant distribution needs, and our current system stands at 79 retail locations. We announced the first nationally available HUD-approved line of duplex homes.

Speaker Change #250: First and foremost first and foremost our plants continued an impressive improvement in our safety results. This fiscal year, our total recordable injury rate was reduced 37%.

Speaker Change #250: This continues a multi year trend of significant improvement in the calendar 2023, we experienced a 35% lower incident rate compared to the industry benchmark.

Speaker Change #251: We also grew our retail footprint by adding 15 stores in the fiscal year after growing 19 stores in fiscal year 'twenty three.

Speaker Change #252: This growth is in support of our plant distribution needs in our current system stands at 79 retail locations.

Speaker Change #253: We announced the first nationally available HUD approved line of duplex homes interest in our anthem series has exceeded expectations and we anticipate orders for this new answer to the affordable housing crisis to grow in the coming quarters.

William C. Boor: Interest in our Anthem series has exceeded expectations, and we anticipate orders for this new answer to the affordable housing crisis to grow in the coming quarter. We also continue to develop and rollout our digital marketing platform across our family of brands with very strong contacts and lead generation. We completed the integration of the Solitaire Acquisition, which closed in late fiscal year 23.

Speaker Change #254: We also continued development and rollout of our digital marketing platform across our family of brands with very strong contacts and lead generation.

Speaker Change #255: We completed the integration of the Solitaire acquisition, which closed in late fiscal year 'twenty three.

William C. Boor: This included efforts to optimize product offerings across the combined retail system, as well as refreshing the solitaire product offering. The full impact of this acquisition will show in the improving market. We advanced our people strategy with continued improvements in leadership and development, Pay and Benefits, Career Processes, and Workplace Improvement. This work is resulting in higher skills, reduced turnover, and improved job satisfaction, and it creates the foundation for our long-term success. A critically important part of that people strategy is training and development. After a standing start only a few years ago, Cavco was recognized this past year as one of the top training organizations in the world through Training Magazine's Apex Award.

Speaker Change #256: This included efforts to optimize product offerings across the combined retail system as well as refreshing the solitaire product offering.

Speaker Change #257: Impact of this acquisition, we will show in the improving markets.

Speaker Change #258: We advanced our people strategy with continued improvements in leadership and development.

Speaker Change #259: Pay and benefits career processes and workplace improvements.

Speaker Change #260: This work is resulting in higher skills reduce turnover and improved job satisfaction and it creates the foundation for long term success.

Speaker Change #261: A critically important part of that people strategy is training and development. After a standing start only a few years ago. <unk> was recognized this past year as one of the top training organizations in the world through the training magazine's Apex Award.

Allison Aden: We purchased $110 million of our stock while maintaining a very strong balance sheet capable of supporting our continued growth. With all these improvements, steady increases in orders, and a return to normal community orders still ahead of us, we're looking forward to producing more quality, affordable homes in the quarters and years ahead. With that, I'd like to turn it over to Allison to discuss the financial results in more detail. Thank you, Bill.

Speaker Change #262: We purchased $110 million of our stock while maintaining a very strong balance sheet capable of supporting our continued growth investments.

Speaker Change #263: With all these improvements steady increases in orders and a return to normal community orders still ahead of US we're looking forward to producing more quality affordable homes in the quarters and years ahead.

Allison Aden: Net revenue for the fourth fiscal quarter of 2024 was $420.1 million, down $56.3 million, or 11.8% compared to $476.4 million during the prior year period. Sequentially, net revenues decreased $26.7 million, driven by a reduction in both units sold and, to a lesser extent, average selling prices, partially offset by higher revenues in financial services. Within the factory build housing segment, fourth-quarter revenue was $398.5 million, down $57.6 million, or 12.6% from $456.1 million in the prior year quarter.

Speaker Change #263: With that I'd like to turn it over to Alison to discuss the financial results in more detail.

Alison: Thank you Bill net revenue for the fourth fiscal quarter of 2024 was $421 million down $56 3 million or 11, 8% compared to $476 4 million in the prior year period.

Alison: <unk> net revenues decreased $26 7 million driven by a reduction in both unit sold and the lesser extent average selling prices, partially offset by higher revenues from financial services.

Within the factory built housing segment fourth quarter revenue was $398 5 million down $37 6 million or 12, 6% from $456 1 million in the prior year quarter.

Alison: Decrease was primarily due to a reduction in homes sold.

Allison Aden: The decrease was primarily due to a reduction in homes sold. Sequentially, for the factory-built housing segment, net revenues compared to the prior quarter were down $28.4 million, or 6.7%, from $426.9 million. The decrease was due to a reduction in homes sold and a lower average selling price per home.

Alison: Sequentially for the factory built housing segment net revenue as compared to the prior quarter was down $28 4 million or six 7% before I, then $26 nine level today.

Alison: The decrease is due to a reduction in homes sold and lower average selling price per home.

Allison Aden: Factor utilization for Q4 of 2024 was approximately 60% when considering all available days for production but was nearly 70% excluding scheduled downtime for local market conditions. This utilization level was consistent with the past four quarters. For the financial services segment, net revenue increased 6.4% to $21.6 million in Q4 of 2024 from $20.3 million in the prior year period. This increase was primarily due to more insurance policies in force and higher insurance premiums as recent rate increases become realized, partially offset by fewer loan sales.

Speaker Change #264: Back to the utilization for Q4 of 2024 was approximately 60% when considering all available days of reduction, but with nearly 70% excluding scheduled downtime for local market conditions.

Speaker Change #264: This utilization level was consistent with the past four quarters.

Speaker Change #265: For the financial services segment net revenue increased six 4% to $21 6 million in Q4 of 2024.

$23 million in the prior year period.

Speaker Change #266: The increase was primarily due.

Speaker Change #267: Our insurance policies in force and higher insurance premiums as recent rate increases become realized.

Speaker Change #267: Its really offset by fewer loan sales.

Allison Aden: Consolidated gross profit in the fourth fiscal quarter as a percentage of net revenue was 23.6 percent, down 170 basis points from 25.3% in the same period last year. In the factory-built housing segment, gross profit declined 200 basis points to 22.4% in Q4 of 2024 versus 24.4% in Q4 of 2023, driven by lower average selling prices and volume, partially offset by lower input costs.

Speaker Change #267: Consolidated gross profit in the fourth fiscal quarter as a percentage of net revenue was 23, 6%.

Speaker Change #268: Down 170 basis points from 25, 3% in the same period last year.

Speaker Change #269: And the factory built housing segment.

Speaker Change #270: Net profit declined 200 basis points to 22, 4% in Q4 of 2024 versus 24, 4% in Q4 of 2023, driven by lower average selling prices and volume, partially offset by lower input costs.

Allison Aden: Gross profit as a percentage of revenue and financial services decreased slightly to 45% in Q4 of 2024 from 45.7% in Q4 of 2023; selling general and administrative expenses in the fourth quarter of fiscal 2024 were 61.4 million, or 14.6 percent of net revenue compared to 66.4 million or 13.9 percent of net revenue during the same quarter last year. The decrease in SG&A expense was due to costs in the prior year that did not recur in 2024, including costs for third-party tax consultants, solitary acquisition costs, lower costs for the litigation between an indemnified former officer and the SEC, and lower compensation on reduced earnings.

Speaker Change #270: Gross profit as a percentage of revenue in financial services decreased slightly to 45% in Q4 of 2024 and 45, 7% in Q4 of 2023.

Speaker Change #271: Selling general and administrative expenses in the fourth quarter fiscal 2024 was $61 4 million or 14, 6% of net revenue compared to $66 4 million or 13, 9% of net revenue during the same quarter last year.

Speaker Change #272: The decrease in SG&A expense was due to cost in the prior year that did not recur in 2024.

Speaker Change #273: <unk> cost for third party tax consultants Solitaire acquisition cost.

Speaker Change #274: Lower cost of the litigation between an unmodified former officer, any SEC and lower compensation on reduced earnings.

Allison Aden: Speaking of the SEC litigation with a former officer, in May of 2024, the SEC settled all outstanding claims against their former CFO, closing all pending matters. Interest income for the fourth quarter was $5.3 million, up 35.6% from the prior year quarter. The increase over the prior year is primarily due to higher interest rates on larger cash balances. Pre-tax profit was 26.7% this quarter, to $42.9 million from $58.6 million for the prior year period. The effective income tax rate was 21% for the fourth fiscal quarter, compared to 19.1% for the same period last year.

former CFO: Speaking of the SEC litigation with the former officer in May of 2020 for the SEC settled all outstanding claims against the former CFO.

Speaker Change #276: Zing all pending matters.

Speaker Change #277: Interest income for the fourth quarter was $5 3 million up 35, 6% in the prior year quarter.

Speaker Change #277: The increase over the prior year, primarily due to higher interest rate.

Speaker Change #277: On larger cash balances.

Speaker Change #278: <unk> profit was 26, 7% this quarter to $42 9 million.

Speaker Change #279: The $8 6 million for the prior year period.

Speaker Change #279: The effective income tax rate was 21% for the fourth fiscal quarter.

Speaker Change #279: To 19, 1% in the same period last year.

Paul Bigbee: Net income to Cavco stockholders was $33.9 million compared to net income of $47.3 million in the same quarter of the prior year. Diluted earnings per share this quarter were $4.03 versus $5.39 per share in last year's fourth quarter. Now I'll turn it over to Paul to discuss the balance sheet. Thank you, Allison. Comparing the March 30, 2024 balance sheet with the April 1, 2023 balance sheet, the cash balance was $352.7 million, up $81.3 million or 30% from $271.4 million at the end of the prior fiscal year. The increase is primarily due to net income adjusted for non-cash items such as depreciation, stock compensation expense, and gain on sale of loans and investments.

Speaker Change #280: Net income to <unk> stockholders was $33 9 million compared to net income of $47 3 million in the same quarter of the prior year.

Speaker Change #281: Diluted earnings per share this quarter was $4 <unk> versus $5 39 per share in last year's fourth quarter.

Paul Bigbee: 11 million, working capital adjustments providing approximately $55.7 million of cash related to inventory and account receivable decreases, and consumer and commercial loan activity with payments received and the sale of loans greater than the use of cash for originating loans. These increases were partially offset by paydowns in accounts payable and accrued liabilities, the acquisition of Kentucky Dream Homes for $17.9 million, net P&E purchases of $17.4 million, and share repurchases of $109.3 million, restricted cash, and related, Other current liability, and an increase from cash collected on service loans in our financial services segment. Prepaid and other assets were lower due to a reduction in delinquent Ginnie Mae loans, partially offset by higher prepaid insurance.

Speaker Change #281: Now I'll turn it over to Paul to discuss the balance sheet.

Paul: Thank you Allison.

Paul Bigbee: The remaining changes due to normal amortization of pre- Property plant equipment are down primarily due to current year purchases more than offset by depreciation and the sale of unutilized equipment acquired with solid cash flows. Accrued expenses and other current liabilities are down from lower accrued bonuses, customer deposits, and, as mentioned above, a reduction in delinquent Ginnie Mae loans. Lastly, stockholders equity exceeded $1 billion, up $57.1 million from $976.3 million as of April 1, 2023.

Paul: Comparing the March 30, <unk> 2024, our balance sheet. Therefore, one 2023 and cash balance was $352 7 million up $81 3 million or 30% from $271 4 million at the end of the prior fiscal year.

Paul: The increase was primarily due to net income adjusted for noncash items, such as depreciation stock.

Paul: Compensation expense and gain on sale of loans and investments.

Speaker Change #282: $11 million working capital adjustments, providing approximately $55 7 million of cash related to inventory and account receivable decreases and consumer and commercial loan activity with payments received in the sale of loans greater than the use of cash originating loans.

Speaker Change #283: These increases were partially offset by paydowns in accounts payable and accrued liabilities the acquisition of Kentucky Dream homes for $17 9 million net PP&E purchases of $17 4 million and share repurchases of $109 3 million.

Speaker Change #284: Restricted cash and the related.

Speaker Change #285: Other current liability increase from cash collected on service loans in our financial services segment.

Speaker Change #286: Prepaid and other assets was lower due to a reduction in delinquent Ginnie Mae loans, partially offset by higher prepaid insurance.

Speaker Change #287: The remaining changes due to normal amortization of Prepays.

Operator.

Speaker Change #288: And the equipment is down primarily due to current year purchases more than offset by depreciation and the sale of Unutilized equipment acquired with solitaire.

Speaker Change #288: Accrued expenses and other current liabilities are down from lower accrued bonuses customer deposits and as mentioned above the reduction in delinquent Ginnie Mae loans.

Speaker Change #289: Lastly, stockholders equity exceeded 1 billion up $57 1 million from $976 3 million as of April one 2023.

Speaker Change #289: With that I'll turn it back to bill.

William C. Boor: And with that, I'll turn it back to Bill. Thank you, Paul. I can't let the moment pass without a comment about the SEC situation and closure of that issue. As Allison mentioned, our former CFO and the SEC reached a settlement that was recently made public. I've been here since the start of this situation, initially as an independent director and then in my current role.

Thank you Paul.

I can't let the moment pass without a comment about the SEC situation and closure of that issue as Alison mentioned, our former CFO and the SEC reached the settlement that was recently made public.

William C. Boor: I've been here since the start of this situation initially as an independent director and then in my current role.

William C. Boor: I'm very proud that this company has continued to operate with excellence and grow in many important ways during this time. I can't count how many times I've told investors how much I look forward to the day when I can report that this issue is behind us, and today is that day. To those investors who have stuck with us throughout, on behalf of everyone at Cavco, thank you very much for your continued confidence.

I'm very proud that this company has continued to operate with excellence and grow in many important ways. During this time.

William C. Boor: I can't count how many times I've told investors how much I look forward to the day when I can report that this issue is behind us.

Speaker Change #290: Today is that day.

Speaker Change #291: Those investors, who have stuck with us throughout on behalf of everyone. At <unk>. Thank you very much for your continued confidence in us.

William C. Boor: With that said, Marvin, please go ahead and open the line for questions. Thank you. At this time, we'll conduct the question and answer session. As a reminder, to ask a question, you'll need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. Our first question comes from a line from Greg Palm of Greg Holm. Your line is now open.

Speaker Change #291: With that Marvin. Please go ahead and open the line for questions.

Marvin: Thank you at this time, we will conduct a question and answer session. As a reminder to ask a question you will need to press star one on your telephone wafer named again.

To withdraw your question. Please press star one again, please standby, while we compile the Q&A roster.

Marvin: Yes.

Marvin: Our first question comes from the line of Greg Palm.

Marvin: Craig Hallum. Your line is now open.

Gregory William Palm: Hey everyone, thanks for taking the questions. I wanted to start with a little bit of color on what you're seeing on the community channel. You know, correct me if I'm wrong, but it didn't sound like there was sort of a much change in expectations there, but you know, curious if you can, you know, at least comment on, you know, visibility levels and, you know, relative to last quarter. Maybe we'll start there. Yeah, yeah. Thanks, Greg.

Speaker Change #292: Yes, hi, everyone. Thanks for taking.

Speaker Change #293: Taking the questions I wanted to start with a little bit of color on what youre seeing in the community channel.

Speaker Change #294: Correct me, if I'm wrong, but it didn't sound like there was sort of much change in expectations here, but curious if you can.

Speaker Change #294: Just comment on visibility levels.

Speaker Change #294: Relative to last quarter, and maybe we'll start there.

Gregory William Palm: Yes, Thanks, Greg it's.

William C. Boor: You know, it is kind of more of the same on that, even over the last several quarters. We kind of hate to speculate here, as you know, but we were still looking kind of well into calendar 2024 before we thought that we'd really start seeing community orders ramp up significantly. And so we're still not there yet.

Speaker Change #295: It is kind of more of the same on that even over the last several quarters.

Speaker Change #296: We kind of hate to speculate here as you know, but we were still working.

Speaker Change #297: Well into calendar 2024, before we thought that we'd really start seeing community orders ramp up significantly and so we're still not to that point.

William C. Boor: And it's kind of been more of the same. I think they're working through it, you know, even though the orders aren't here yet. I'm confident in my discussions that inventories are coming down, and so we still feel the same as we have for a while, that we should see improvement this calendar year. Yeah, makes sense.

Speaker Change #297: And it's kind of been more of the same I think they're working through it.

Speaker Change #297: Even though the orders aren't here yet.

Speaker Change #297: Im caught.

Speaker Change #298: Confident in my discussions that inventories are coming down and so we still feel the same as we have for well that we should see improvement this calendar year.

William C. Boor: And I know we're all cognizant of, (inaudible) Yeah, you know, trying to characterize this quarter as we see it, which is this past quarter, which is that it's been one of transition for our shipment numbers, and we're really heavily influenced by the last production days that I mentioned at the beginning of the quarter. And as I said in my comments, you know, we talk about a utilization rate of 60%, but if you think about that last time at the beginning.

Speaker Change #299: Yes, it makes sense and I know you're cognizant of that.

You don't provide any guidance, but you at least gave a little bit of color around <unk>.

Production rates, where it was.

Speaker Change #299: Where it is today should we at least.

Speaker Change #299: Is there any sort of sense on an increase in production rates.

Speaker Change #299: For instance, this quarter versus last.

Yes.

Speaker Change #300: Tried to characterize this quarter as we see it which is this past quarter, which is that it's been one of transition.

Speaker Change #301: And our shipment numbers.

Speaker Change #302: We're really heavily influenced by the loss production days that I mentioned at the beginning of the quarter and as I said in my comments.

Speaker Change #303: We talk about utilization.

Speaker Change #304: Utilization of 60%, but if you think about that last time at the beginning.

William C. Boor: That means we finished the quarter at a higher pace. So we're starting to, as I indicated, schedules are getting back. It's not only schedules, but it's also run rate that the plants are managing, trying to, you know, ramp back up and stay kind of in line with market demand so that, in some cases, the backlogs don't actually get away from us.

Speaker Change #305: That means we finished the quarter at a higher pace. So we're starting to as it as I indicated schedules are getting back it's not only schedules, but it's also run rates.

Speaker Change #306: The plants are managing trying to ramp back up and stay kind of in line with market demand so that.

Speaker Change #306: In some cases, so the backlogs don't actually get away from us so.

William C. Boor: So, I think we're clearly in a better position now than we were at the beginning of the calendar year, and then we were for most of last year. We've seen that steady improvement in wholesale orders. And, you know, I do think I'm repeating myself here a little bit.

Speaker Change #306: I think we're clearly in a better position now than.

Speaker Change #307: Then we were at the beginning of the calendar year and then we were for most of last year, we've seen that steady improvement in wholesale orders.

Speaker Change #307: And I do think I'm repeating myself here a little bit.

Allison Aden: But I do think that's noteworthy given that we haven't really seen interest rates. So, if you have a view that interest rates have some potential for going down a little bit in the coming quarters and if you agree with our view that community orders are a bit of a tailwind, then, you know, I think we're heading to some better times, notwithstanding some significant economic shock. Yeah, that makes sense. A couple for Allison, you know, first on SG&A.

Speaker Change #308: But I do think thats noteworthy given that we haven't really seen interest rate relief.

Speaker Change #309: So if you have a view that interest rates have some potential forward going down a little bit in the coming quarters and if you agree with our view that community orders are a bit of a tailwind then.

Speaker Change #310: I think we're heading into some better times, notwithstanding some significant economic shock.

Speaker Change #310: Yeah, Yeah, it makes sense.

Speaker Change #310: A couple for Allison first on SG&A.

Allison Aden: You know, I was down a little bit sequentially. Was that mostly just due to, you know, lower revenue in the variable portion? And I guess more importantly, how do you sort of feel about SG&A going forward in terms of an absolute level? Yes, as I mentioned in the call, when you compare it to the prior year, obviously, we're down for some non-recurring costs, and quarter to quarter, you saw the reduction in that we have no SEC-related identified costs for the former officer.

Speaker Change #310: It was down a little bit sequentially was that mostly just on lower revenue and the variable portion and I guess more importantly, how do you sort of feel about SG&A going forward in terms of an absolute level.

Speaker Change #310: Yes.

Speaker Change #310: And in the call when you compare it.

Speaker Change #310: The prior year, obviously was down for the nonrecurring costs quarter to quarter. You saw the reduction that we have no SEC related indemnify cost a former officer I think that as we look at cost now and as we go forward, we've talked about that Sanjay SG&A as a high variable cost.

Allison Aden: I think that as we look at costs now and as we go forward, we've talked about that SG&A has a high variable cost component. So we're looking at a pretty steady state right now. And of course, as the top line grows, we'll see our variable compensation flow through SG&A. So still, it stays pretty consistent to the level of the top line and is still a high component that's variable. Okay, and then my last one was just more of a clarification. Was there any purchase accounting impact on gross margin associated with the Solitaire acquisition in this past quarter?

Sanjay SG&A: To that so we're looking at a pretty steady state right now and of course as the topline grows we'll see available compensation flow through SG&A so still.

Sanjay SG&A: Stays pretty consistent to hit the level of top line and still high component that stable.

Sanjay SG&A: Okay and then my last one was just a more of a clarification was there any purchase accounting impact on gross margin associated with the solitaire acquisition in this past quarter, we passed out at this point.

Allison Aden: Are we past that at this point? I'd say largely we're past that, it was a very, it was a small amount. We're still selling that inventory off, but it's pretty insignificant at this point, Greg.

Speaker Change #311: I'd say largely were passed out of it is a small amount.

Speaker Change #311: Okay. Okay.

Speaker Change #311: All of that inventory off, but it's pretty insignificant at this point Gregg.

Gregory William Palm: Perfect. I will leave it there. Thanks. Thank you. Thank you for one moment for our next question. Again, as a reminder to ask a question, you may press star 11 on your telephone. Our next question comes from the line of Jay McCanless of Wedbush. Your line is now open. Hey, good morning, everyone. So the first question I had was shipments being down 12% in the quarter versus the industry being up nearly 15%. Can you talk about what's going on here?

Gregg: Perfect I will I'll leave it there thanks.

Speaker Change #312: Thank you.

Speaker Change #313: Thank you one moment for our next question.

Speaker Change #314: Again as a reminder to ask a question.

Speaker Change #315: Press Star one on your telephone.

Speaker Change #316: Our next question.

Speaker Change #317: Comes from the line of Jay Mccanless Wedbush Wedbush. Your line is now open.

Speaker Change #318: Hey, good morning, everyone.

Jay McCanless: So the first question I had with shipments being down 12% in the quarter versus the industry being up nearly 15% can you talk about what's going on there.