Q1 2025 Cavco Industries Inc Earnings Call
Speaker Change: Good day and thank you for standing by. Welcome to the First Quarter Fiscal Year 2025 Cavco Industries Inc. Earnings Call Webcast. At this time, all participants are in a listen-only mode.
Operator: Earnings Call webcast. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will 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 would now like to hand the conference over to your speaker today, Mark Fusler, Corporate Controller and Investor Relations. Please go ahead.
Speaker Change: After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again.
Speaker Change: Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Mark Fusler, Corporate Controller and Investor Relations. Please go ahead.
Mark Fusler: Good day, and thank you for joining us for Cavco Industries' first quarter fiscal year 2025 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.
Speaker Change: Good day and thank you for joining us for Cavco Industries' first quarter fiscal year 2025 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.
Mark Fusler: 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. All forward-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 statements made by or on behalf of Cavco.
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 Cavco's financial and operational performance,
Speaker Change: 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: All four looking statements involve risks and uncertainties.
Speaker Change: which could affect Cavco's actual results.
Mark Fusler: 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 statements. This conference call also contains time-sensitive information that is only accurate as of the date of this live broadcast, Friday, August 2, 2024. Cavco undertakes no obligation to revise or update any forward-looking statement, whether written or oral, to reflect events or circumstances after the date of this conference call, except as required by law. Now, I would like to turn the call over to Bill Boor, President and Chief Executive Officer. Bill?
Speaker Change: and could cause its actual results to differ materially from those expressed in any forward-looking statements.
Speaker Change: 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.
Speaker Change: which identify specific factors that may cause actual results or events to differ materially from those described in any forward-looking statements.
Speaker Change: This conference call also contains time-sensitive information that is only accurate as of the date of this live broadcast.
Speaker Change: Friday, August 2, 2024. Cavco 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.
William Boor: Welcome and thank you for joining us today to review our first quarter results. The positive order trend we saw in Q4 continued this quarter, enabling our plants to increase production with rising shipments and a growing backlog. Obviously, we want to spend time discussing this in more detail, but first, I'd like to take a few minutes on the financial services segment, specifically insurance. Our insurance operations incurred very high losses in Q1. Nobody likes to use or hear the weather excuse, but the unusually high number of convective storms in Texas and the fires in Ruedoso, New Mexico combine to create a level of claims we haven't seen before. We incurred a number of individual events, none of which reached our reinsurance coverage.
Speaker Change: Now I'd like to turn the call over to Bill Boor, President and Chief Executive Officer. Bill?
Bill Boor: Welcome and thank you for joining us today to review our first quarter results.
Bill Boor: The positive order trend we saw in Q4 continued this quarter, enabling our plants to increase production with rising shipments and a growing backlog.
Speaker Change: Obviously we want to spend time discussing this in more detail, but first I'd like to take a few minutes on the financial services segment, specifically insurance.
Speaker Change: Our insurance operations incurred very high losses in Q1.
Speaker Change: Nobody likes to use or hear the weather excuse, but the unusually high number of convective storms in Texas and the fires in Ruedoso, New Mexico combined to create a level of claims we haven't seen before.
William Boor: Insurance is, by its nature, a volatile business, and it gets a lot of attention when results are down. But we're managing for the long term. And with that mindset, we can tolerate challenging periods, as long as the fundamentals of the business are sound. The key to success over time is being on top of the risks you're willing to cover and making sure you're getting premiums appropriate to those covered risks. We're actively managing these fundamentals in a very difficult insurance environment.
Speaker Change: We incurred a number of individual events, none of which reached our reinsurance coverage.
Speaker Change: Insurance is by its nature a volatile business and it gets a lot of attention when results are down.
Speaker Change: We're managing for the long term and with that mindset we can tolerate challenging periods as long as the fundamentals of the business are sound.
Speaker Change: The key to success over time is being on top of the risks you're willing to cover and making sure you're getting premiums appropriate to those covered risks.
William Boor: Over time, our insurance operations have provided healthy returns, and we're confident that will continue to be the case despite the recent results. Insurance is an adjacent business, as we understand it. And it adds value both to our retail operations and to our homebuyers who need ready access to our policy in order to complete their transaction and protect their home. Given the losses this quarter, financial services deserve some up-front discussion. And, of course, we'll be happy to answer questions.
Speaker Change: We're actively managing these fundamentals in a very difficult insurance environment. Over time, our insurance operations have provided healthy returns, and we're confident that will continue to be the case despite the recent results.
Speaker Change: Insurance is an adjacent business. We understand it and it adds value both to our retail operations and to our homebuyers who need ready access to our policies in order to complete their transaction and protect their homes.
Speaker Change: Given the losses this quarter, financial services deserve some up-front discussion, and of course, we'll be happy to answer questions.
William Boor: But I don't want that to take the focus away from the main event, our factory-built housing results, which continue to improve. So let's turn our attention to that. Momentum had been building through this quarter for seven quarters. Now, we've reported that same plant orders were increasing, not dramatically, but headed in the right direction. This quarter, the sequential increase was a bit more significant, up about 25%. As a result, we were able to increase shipments 20%, and our units and backlog climbed 22%. Our working backlog remained at about seven to eight weeks, held in check by a significant increase in our weekly production rate.
Speaker Change: But I don't want that to take focus away from the main event, our factory built housing results which continue to improve. So let's turn our attention to that.
Speaker Change: Momentum was building through this quarter. For seven quarters now, we've reported that same plant orders were increasing, not dramatically, but headed in the right direction.
Speaker Change: This quarter, the sequential increase was a bit more significant, up about 25%.
Speaker Change: As a result, we were able to increase shipments 20% and our units and backlog climbed 22%.
Speaker Change: Our working backlog remained at about seven to eight weeks, held in check by a significant increase in our weekly production rate.
William Boor: sequentially, our average selling price dropped 4%. But I think what's most relevant is what we're seeing on a same product basis in wholesale prices. The takeaway there is that wholesale pricing has been pretty stable, dropping less than 1%. As we've talked in the past, there are a lot of dynamics in our report at ASP. And most of the 4% drop is the result of a lower percent of our product going through company-owned stores, as well as the mixed shift we saw towards single-section units and pricing in our retail operations, which can vary period to period. Notably, our factory gross margin remained very steady, up 20 basis points sequentially.
Speaker Change: Sequentially, our average selling price dropped 4%. I think what's most relevant is what we're seeing on a same product basis in wholesale pricing.
Speaker Change: The takeaway there is that wholesale pricing has been pretty stable, dropping less than 1%.
Speaker Change: As we've talked in the past, there are a lot of dynamics in our reported ASP, and most of the 4% drop is the result of a lower percent of our product going through company-owned stores.
Speaker Change: The mixed shift we saw towards single section units and pricing in our retail operations, which can vary period to period.
Speaker Change: Notably, our factory gross margin remained very steady, up 20 basis points sequentially.
William Boor: Without the help of any significant interest rate relief, buyers are placing orders because they need homes, and rate stability enables them to have confidence in their monthly payment. The strongest part of the market is the lower-cost single-story homes. In my view, affordability affects which home a family can afford across the spectrum of home prices, but at the lowest price homes, it affects whether they can afford to own.
Speaker Change: Without the help of any significant interest rate relief, buyers are placing orders because they need homes and rate stability enables them to have confidence in their monthly payment.
Speaker Change: The strongest part of the market is the lower-cost single-section home.
Speaker Change: In my view affordability affects which home a family can afford across the spectrum of home prices, but at the lowest price homes it affects whether they can afford to own.
William Boor: There are a startlingly high number of families right on the cusp of being able to afford a home at all. They've been priced out by inflation and rate increases, and they will come back into the market if they get monthly payment relief in any form. Community orders are not back to normal, but they are improving. For a number of quarters, it was correct to assume community orders were off significantly across the board.
Speaker Change: There are a startlingly high number of families right on that cusp of being able to afford a home at all.
Speaker Change: They've been priced out by inflation and rate increases.
Speaker Change: But they will come back into the market if they get monthly payment release in any form.
Speaker Change: Community orders are not back to normal, but they are improving. For a number of quarters, it was correct to assume community orders were up significantly across the board.
William Boor: Now we're starting to see some feathering in of increases as specific communities get back to more normal order rates. This is consistent with what we've been expecting from the segment, and we anticipate improvement through the remainder of the year. This is a story-by-story situation, just as it was when retailers recovered from their inventory issues a year ago. It's regional and community specific. Regarding regional differences, Florida remains well off what we consider normal community order rates.
Speaker Change: Now we're starting to see some feathering in of increases as specific communities get back to more normal order rates.
Speaker Change: This is consistent with what we've been expecting from the segment and we anticipate improvement through the remainder of the year.
Speaker Change: This is a story-by-story situation just as it was when retailers recovered from their inventory issues a year ago. It's regional and community-specific.
Speaker Change: Regarding regional differences, Florida remains well off what we consider normal community order rates.
William Boor: To a lesser extent, we continue to see lagging community orders in the Southwest. Ultimately, community orders will recover, and this will provide added shipments over current levels. With that said, I'd like to turn it over to Allison to discuss the financial results in more detail.
Speaker Change: To a lesser extent, we continue to see lagging community orders in the Southwest.
Speaker Change: Ultimately, community orders will recover and this will provide added shipments over current levels.
Allison Aden: Thank you, Bill. Net revenue for the first fiscal quarter of 2025 was $477.6 million, up $1.7 million, or 0.4%, compared to $475.9 million during the prior year. sequentially, net revenues increased $57.5 million, driven by an increase in units sold, partially offset by lower average selling prices and lower revenues in financial services. Within the factory built housing segment, first quarter net revenue was $458 million, up.9 million or.2% from $457.1 million in the prior year quarter.
Speaker Change: With that, I'd like to turn it over to Allison to discuss the financial results in more detail.
Allison Aden: Thank you, Bill. Net revenue for the first fiscal quarter of 2025 was $477.6 million, up $1.7 million, or 0.4%, compared to $475.9 million during the prior year.
Allison Aden: Sequentially, net revenues increased $57.5 million, driven by an increase of units sold, partially offset by lower average selling prices and lower revenues in financial services.
Allison Aden: Within the factory built housing segment, first quarter net revenue was $458 million, up .9 million or .2% from $457.1 million in the prior year quarter.
Allison Aden: This increase was primarily due to a 3% increase in homes sold, partially offset by a 2.7% decrease in average revenue for homes sold. Factory utilization for Q1 of 2025 was approximately 65% when considering all available production days, but was nearly 70% excluding scheduled downtime for the market and a holiday. Utilization was approximately 60% in the prior year period.
Allison Aden: This increase was primarily due to a 3% increase in home sold, partially offset by a 2.7% decrease in average revenue for home sold.
Allison Aden: Factory utilization for Q1 of 2025 was approximately 65% when considering all available production days, but was nearly 70% excluding scheduled downtime for market and a holiday. Utilization was approximately 60% in the prior year period.
Allison Aden: The financial services segment net revenue increased 4.2% to $19.6 million from $18.8 million. This increase was primarily due to more insurance policies in force and higher insurance premium rates, partially offset by fewer loan sales and lower interest income earned on the acquired consumer loan portfolio. Consolidated gross margin in the first fiscal quarter as a percentage of net revenue was 21.7%, down 310 basis points from 24.8% in the same period last year. This decrease was due to lower average selling prices in the factory built housing segment and losses in financial services.
Allison Aden: For the financial services segment, net revenue increased 4.2 percent to $19.6 million from $18.8 million.
Allison Aden: This increase was primarily due to more insurance policies in force and higher insurance premium rates, partially offset by fewer loan sales and lower interest income earned on the acquired consumer loan portfolio.
Allison Aden: Consolidated gross margin in the first fiscal quarter as a percentage of net revenue was 21.7%, down 310 basis points from 24.8% in the same period last year.
Allison Aden: This decrease was due to lower average selling prices in the factory built housing segment and losses in financial services.
Allison Aden: In the factory-built housing segment, gross profit decreased 220 basis points to 22.6% in Q1 of 2025 versus 24.8% in Q1 of 2024, driven by lower average selling prices. Financial services gross margin as a percentage of revenue decreased to negative 0.6% in Q1 of 2025 from 24% in Q1 of 2024. The insurance division was significantly impacted by multiple weather events in Texas, as well as the forest fires in New Mexico, resulting in a segment pre-tax net loss of 5.2 million. Selling general and administrative expenses in the first quarter of 2025 were $64.9 million, or 13.6% of net revenue, compared to $61.7 million, or 13% of net revenue during the same quarter last year.
Speaker Change: In the factory build housing segment, the gross profit decreased 220 basis points to 22.6% in Q1 of 2025 versus 24.8% in Q1 of 2024, driven by lower average selling prices.
Speaker Change: Financial services gross margin as a percentage of revenue decreased to negative 0.6 percent in Q1 of 2025 from 24 percent in Q1 of 2024.
Speaker Change: The insurance division was significantly impacted by multiple weather events in Texas, as well as the forest fires in New Mexico, resulting in a segment pre-tax net loss of $5.2 million.
Speaker Change: selling general and administrative expenses in the first quarter of 2025 were 64.9 million or 13.6 percent of net revenue compared to 61.7 million or 13 percent of net revenue during the same quarter last year.
Allison Aden: The increase in these expenses was primarily due to $1.5 million related to the Kentucky Dream Home acquisition that occurred in the third quarter of fiscal 2024, increased employee compensation, and increases in health care and professional services support. Interest income for the first quarter was $5.5 million, up 19.3% from the prior quarter. The increase over the prior year is primarily due to higher interest rates on larger cash balances.
Speaker Change: The increase in these expenses was primarily due to $1.5 million related to the Kentucky Dream Home acquisition that occurred in the third quarter of fiscal 2024, increased employee compensation, and increases in health care and professional services support.
Speaker Change: Interest income for the first quarter was $5.5 million, up 19.3% from the prior year quarter. The increase over the prior year is primarily due to higher interest rates on larger cash balances.
Allison Aden: Pre-tax profit was down 27.7% this quarter to $43.9 million from $60.7 million for the prior year period. The current period includes a pre-tax loss of $5.2 million in the financial services segment. The effective income tax rate was 21.5% for the first fiscal quarter, compared to 23.5% in the same period last year.
Speaker Change: Pre-tax profit was down 27.7% this quarter to $43.9 million from $60.7 million for the prior year period.
Speaker Change: The current period includes a pre-tax loss of $5.2 million in the financial services segment.
Speaker Change: The effective income tax rate was 21.5% for the first fiscal quarter, compared to 23.5% in the same period last year.
Allison Aden: Net income to Cavco stockholders was $34.4 million compared to net income of $46.4 million in the same quarter of the prior year. Diluted earnings per share this quarter were $4.11 per share versus $5.29 per share in last year's first quarter. A pre-tax net loss of $5.2 million in the financial services segment resulted in a reduction of diluted net income per share of approximately 49 cents on an after-tax basis. Additionally, from a sequential perspective, financial services posted an after-tax earnings of $3.3 million in Q4 of 2024.
Speaker Change: Net income to Cavco stockholders was $34.4 million compared to net income of $46.4 million in the same quarter of the prior year.
Speaker Change: Diluted earnings per share this quarter were $4.11 per share versus $5.29 per share in last year's first quarter.
Speaker Change: The pre-tax net loss of $5.2 million in the financial services segment resulted in a reduction of diluted net income per share of approximately $0.49 on an after-tax basis.
Speaker Change: Additionally, from a sequential perspective, financial services posted an after-tax earnings of $3.3 million in Q4 of 2024.
Allison Aden: The sequential swing relative to our positive Q4 2024 financial services performance is approximately 89 cents. As insurance results have been a focus this quarter, we also wanted to alert you to an additional weather event that occurred after the end of the first quarter that will impact our second quarter results. In early July, Hurricane Beryl made landfall near Houston, Texas.
Speaker Change: The sequential swing relative to our positive Q4 2024 financial services performance is approximately 89 cents.
Speaker Change: As insurance results have been a focus this quarter, we also wanted to alert you to an additional weather event that occurred after the end of the first quarter that will impact our second quarter results.
Allison Aden: While we don't write insurance coverage in coastal counties, several of our inland policy holders were impacted by severe wind damage. Currently, we expect losses to be in the range of our reinsurance limit, which is $4 million. Anything over $4 million will be covered by our reinsurance. Now, I'll turn it over to Paul to discuss the balance sheet. Thanks, Allison.
Speaker Change: In early July , Hurricane Beryl made landfall near Houston, Texas.
Speaker Change: While we don't write insurance coverage in coastal counties, several of our inland policy holders were impacted by severe wind damage.
Speaker Change: Currently, we expect losses to be in the range of our reinsurance limit, which is $4 million. Anything over $4 million will be covered by our reinsurance.
Paul Bigbee: Thanks, Allison. Comparing the June 29, 2024 balance sheet to March 30, 2024, the cash balance was $359.3 million, up $6.6 million from $352.7 million at the end of the prior fiscal year. The change in the balance consists of a series of pluses and minuses. I'll start with the increases in cash, which include net income adjusted for non-cash items such as depreciation and stock-based compensation expense. Prepaid and other current asset decreases of 5.6 million, and an increase in current liabilities of $22.7 million.
Paul Bigbee: Decreases to cash include accounts receivable increase of $8 million, purchases of property plan equipment of $5 million, inventory increases of 3.5 million, commercial and consumer loan originations greater than sales and payments of $10.9 million, and lastly, share repurchases of $29.2 million. 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 down due to lower prepaid insurance and workers' compensation balances, partially offset by normal amortization of other prepaid. Property planning equipment increases from additional investment in equipment and plant location. Recruit expenses and other current liabilities are up from increased insurance loss reserves, higher customer deposits, and an increase in volume rebates.
Speaker Change: Now I'll turn it over to Paul to discuss the balance sheet.
Paul Bigbee: Thanks, Allison. Comparing the June 29, 2024 balance sheet to March 30, 2024, the cash balance was $359.3 million, up $6.6 million, from $352.7 million at the end of the prior fiscal year.
Paul Bigbee: The change in the balance consists of a series of pluses and minuses.
Paul Bigbee: I'll start with the increases in cash, which include net income adjusted for non-cash items such as depreciation and stock-based compensation expense.
Paul Bigbee: prepaid and other current asset decreases of 5.6 million and an increase in current liabilities of 22.7 million
Paul Bigbee: Decreases to cash include accounts receivable increase of $8 million, purchases of property plan equipment of $5 million,
Paul Bigbee: Inventory increases of 3.5 million.
Paul Bigbee: Commercial and consumer loan originations greater than sales and payments of $10.9 million and lastly share repurchases of $29.2 million.
Paul Bigbee: Restricted cash and the related other current liability increase from cash collected on service loans in our financial services segment.
Paul Bigbee: Prepaid and other assets was down due to lower prepaid insurance and workers compensation balances, partially offset by normal amortization of other prepaids.
Paul Bigbee: Property, plant, and equipment increased from additional investment in equipment and plant locations.
Paul Bigbee: Accrued expenses and other current liabilities are up from increased insurance loss reserves, higher customer deposits, and an increase in volume rebates.
Paul Bigbee: Finally, stockholders' equity was essentially flat at $1 billion.
Paul Bigbee: Finally, stockholders' equity was essentially flat at $1 billion.
Operator: Stevie, let's go ahead and move on to the questions. Thank you. As a reminder to ask,
Paul Bigbee: Now I'll turn it back to Bill.
Operator: Thank you. As a reminder, to ask a question, please 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 list. And our first question comes from Daniel Moore of CJS Securities. Your line is open.
Bill Boor: Thank you, Paul.
D.D.: Stevie, let's go ahead and move on to the questions.
Stevie: Thank you. As a reminder, to ask a question, please 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.
Speaker Change: And our first question comes from Daniel Moore of CJS Securities. Your line is open.
Daniel Moore: Bill, Allison, Paul, good morning and thanks for taking the question. Good morning.
Daniel Moore: Start with financial services and then get back to the main events as you described, Bill. Just to clarify, Allison, it sounds like the full impact in the quarter was maybe closer to $8 or $9 million in terms of claims, or $0.89. Is that relative to what a sort of more normal profitable quarter would look like in that business? Is that the right way to think about it?
Daniel Moore: Bill, Allison, Paul, good morning, and thanks for taking the questions.
Speaker Change: Good morning.
Daniel Moore: Start with financial services and then get back to the main events, as you described, Bill. Just to clarify, Allison, it sounds like...
Daniel Moore: The full impact in the quarter was maybe closer to 8 or 9 million in terms of the claims or 89 cents. Is that, you know, relative to what a sort of more normal profitable quarter would look like in that business? Is that the right way to think about it?
Allison Aden: That's the right way to think of it, Dan. It would have been an increase of, instead of posting a loss of $0.49, we would have posted a gain of $0.40, as we did in Q4, so that would have swung us $0.89.
Dan: That's the right way to think of it, Dan. It would have been an increase of, instead of posting a loss of $0.49, typically we would have posted a gain of $0.40 as we did in Q4, so that would have swung us $0.89.
Allison Aden: Perfect, that makes sense. And then for fiscal Q2, Hurricane Beryl, is it the impact of $4 million, or are you expecting an operating income loss of $4 million?
Speaker Change: Perfect, that makes sense. And then for fiscal Q2, hurricane barrel, is it the impact is four million or you expect an operating income loss of four million?
Allison Aden: Right now, the impact is estimated to be right at four million.
Allison Aden: Okay, okay, that's really helpful. And are there any other weather events that are significant, at least as of this stage, that we're aware of?
Speaker Change: Right now the impact is estimated to be right at four million. Okay, okay, that's really helpful. And no other weather events that are significant, at least as of this date, that we're aware of?
Allison Aden: Not that we have visibility so far.
William Boor: Not yet. Perfect. What can you tell us about potential premium rate increases or other measures that you might consider given the higher claims occurrence?
Speaker Change: Not that we have visibility to now.
Speaker Change: What can you tell us about potential premium rate increases or other measures that you might consider given the higher claims occurrences?
William Boor: Yeah, it's been a bit of an ongoing process. We've been, you have to basically file with each state when you are looking for an increase, and that's been going on for some time, as probably anyone on the call who owns a home knows insurance rates have been skyrocketing for all of us. So we've been getting those premium increases, and we continue to be pretty active in that process, so there are more pretty sizable increases coming.
Speaker Change: Yeah, we've, it's been a bit of an ongoing process. We've been, you have to basically file with each state when you are looking for an increase and that's been going on actually for some time as...
Speaker Change: Probably anyone on the call who owns a home knows insurance rates have been skyrocketing for all of us. So we've been getting those premium increases and we continue to be pretty active in that process. So there's more pretty sizable increases coming.
William Boor: The dynamics of insurance, and maybe I'm telling you things you already understand about it, basically, you've got to incur losses in order to ask for the premium increase, and then when you get the approval, it takes a renewal cycle, so about a year before the whole premium increase takes hold. So that's just kind of the nature of the business, but to your question Dan, we absolutely have pretty sizable increases coming in all the states we operate in.
Speaker Change: The dynamics of insurance, and maybe I'm telling you things you already understand about it.
Speaker Change: It basically is you've got to incur the losses in order to go ask for the premium increase.
Speaker Change: And then when you get the approval, it takes a renewal cycle, so about a year before the whole premium increase takes hold. So that's just kind of the nature of the business, but to your question, Dan, we absolutely have pretty sizable increases coming in all the states we operate in.
William Boor: Perfect. Up to the more interesting stuff. With backlog up 21% sequentially, how should we think about production or shipment growth, you know, in fiscal Q2 and beyond versus Q1?
Speaker Change: Perfect. Up to the more interesting stuff. With backlog up 21% sequentially, how should we think about production or shipment growth, you know, in fiscal Q2 and beyond versus Q1?
William Boor: Yeah, I guess what I can tell you, I mean, short of giving guidance on the quarter, we can kind of tell you, being a bit into the quarter now, that the trends continue. So I guess what I'd say is our backlog is up, you know, at this point in the quarter compared to where we finished, as well as production and order rates, so everything is continuing on an upward trend at this point.
Speaker Change: Yeah, I guess what I could tell you, I mean short of giving guidance on the quarter, we can kind of tell you being a bit into the quarter now that the trends continue. So I guess what I'd say is our backlog is up.
Speaker Change: in the, you know, at this point in the quarter compared to where we finished as well as production and order rates. So everything is continuing on an upper trend at this point.
William Boor: You know, we're in that mode. We really don't want to see backlogs get away from us. So we're in the mode of trying to figure out, not trying to figure out, but putting the efforts in place to ramp production up pretty aggressively in order to try to match this stronger order rate that we're seeing.
Speaker Change: You know, we're in that mode. We really don't want to see backlogs get away from us, so we're in the mode of trying to figure out, not trying to figure out, but putting the efforts in place to ramp production up pretty aggressively in order to try to match this stronger order rate that we're seeing.
William Boor: Very good. And it sounds like it's really still mostly retail, you know, trickle an order here, an order there from the community, but waiting for that to come back in a more meaningful way. Is that the right way to think about it?
Speaker Change: Very good, and it sounds like it's really still mostly retail, you know, trickle, an order here, an order there from community, but waiting for that to come back in a more meaningful way. Is that the right way to think about it?
William Boor: Yeah, communities are definitely showing up now. I mean, I'm kind of somewhere in between, I guess, as I've described that.
William Boor: The retail remains pretty solid as it has been and growing, and communities are starting to come back. It's just kind of there's a ways to go, if that makes sense. So we're somewhere in the middle, and I remember talking about that a couple quarters ago that given the inventory levels, if demand supported them, which it really has, then we were kind of looking mid this calendar year to start seeing some relief and that it would take a little time to get a hundred percent back. So we're kind of on that schedule, and we think there's still some improvement to go.
Speaker Change: Yeah, communities are definitely showing up now. I mean, I'm kind of somewhere in between, I guess, as I've described that. The retail remains pretty solid, as it has been.
Daniel Moore: helpful. Last one, I'll jump back in the queue.
Speaker Change: and growing. Communities are starting to come back. It's just kind of, there's a ways to go, if that makes sense. So we're somewhere in the middle, and I remember talking about that a couple quarters ago, that given the inventory levels,
Speaker Change: If demand supported it, which it really has, then we were kind of looking mid this calendar year to start seeing some relief and that it would take a little time to get 100% back. So we're kind of right on that schedule and we think there's still some improvement to go.
William Boor: Factory built growth margin 22% up a little bit. And despite ASPs being down, which you described, you know, partially due to maybe a few less houses sold through your retail. As capacity ramps and as production ramps and utilization improves, is there some upside to that? Or should we think of that as the new sort of run rate, at least for now?
Speaker Change: helpful last one I'll jump back in queue factory built growth margin 22% up a little bit
William Boor: Thanks again.
Speaker Change: And despite ASPs being down, which you described, you know, partially due to maybe a few less houses sold through your retail, as capacity ramps and as production ramps and utilization improves,
Speaker Change: Is there some upside to that, or should we think of that as the new sort of run rate, at least for now? Thanks again.
Allison Aden: Sure, I mean, I would think that on the positive side, as we continue to ramp, as we've seen in our historical financials, we'll have leverage in our factory overhead component. The second element is clearly the cost of materials, primarily lumber and OSB. As we've talked about before, we got about a 60-day lag from what we can see in the commodities market, which during the period that would most likely impact our second quarter, has been relatively low. If we take all those factors, the pricing, the cost of our materials, and our leveraging of factory overheads, that would be where we land in Q2.
Speaker Change: Sure, I mean, I would think that on the positive side, as we continue to ramp, as we've seen in our historical financials,
Speaker Change: We'll have leverage on our factory overhead component.
Speaker Change: The second element is clearly the cost of materials, primarily lumber and OSB.
Speaker Change: We've, as we've talked about before, we've got about a 60 day lag from what we can see in the commodities market, which during the period that would most likely impact our second quarter, it's been relatively low. If we take all of those factors, the pricing.
Speaker Change: The cost of our materials and our leveraging of factory overheads, that would be where we land in G2.
Daniel Moore: Really helpful, Allison. Okay, I'll jump back in with any follow-ups. Thank you. Thanks, Dan.
Speaker Change: Really helpful, Allison. Okay, I'll jump back in with any follow-ups. Thank you.
Dan: Thanks, Dan. Thank you.
Gregory Palm: Our next question comes from Greg Palm of Craig Hallam. Your line is open.
Speaker Change: Our next question comes from Greg Palm of Craig Hallam. Your line is open.
Gregory Palm: Yeah, I think so.
Gregory Palm: Yeah, thanks for taking the questions. I just wanted to, you know, confirm, just based on what you're seeing in July, you said that, you know, backlogs have been up since quarter end. So order rates, production rates, you said all that is actually up relative to how it finished at the end of the quarter. Yeah, that's correct. And as it relates to community orders in general, are you seeing any notable difference between, you know, when they're ordering and when they want to actually receive the homes? You know, for instance, is that backlog stretching out maybe a little bit longer than it is historically, or is the community actually taking the orders, you know, for near-term delivery?
Greg Palm: Yeah, thanks for taking the questions. I just wanted to, you know, confirm, just based on what you're seeing in July , you said that, you know, backlogs up since quarter end, so order rates, production rates, you said all that is actually up relative to how it finished end of quarter.
Speaker Change: Yeah, that's correct.
Speaker Change: and...
Speaker Change: As it relates to community orders in general, are you seeing any notable difference between
Speaker Change: you know, call it...
Speaker Change: When they're ordering and when they want to actually receive the homes, you know, for instance, you know, is that backlog stretching out maybe a little bit longer than it is historically, or are the communities actually taking the orders, you know, for near-term delivery?
William Boor: Yeah, it's a good question. I think it's the taking. They're making orders that they know are going to come relatively quickly. You know, we're in a pretty good spot on backlog being in that seven or eight weeks range. And so, you know, we focus our view of the backlog on units that we can make and ship, right? We're not really focused on orders that are way out in time. And so, if someone places an order with us right now, they know that they're going to have that home in a couple months. So they're not placing orders and saying, okay, here's an order that I want it delivered nine months from now.
Speaker Change: Yeah, it's a good question. I think it's the taking, they're making orders that they know are going to come relatively quickly, you know, we're in a pretty good spot on backlog being in that seven or eight week range. And so, you know, we focus our view of the backlog on.
Speaker Change: units that we can make and ship, right? We're not really focused on orders that are way out in time and so if someone places an order with us right now they know that they're going to have that home in a couple months.
Speaker Change: So they're not they're not placing orders and saying okay here's an order that I wanted nine months from now.
Gregory Palm: Yep, okay. And I'm curious, has anything notable happened with rates over the last couple months? And I think where I'm sort of going with all these questions is what Anything changing that's, you know, essentially increasing or accelerating, it sounds like the orders at retail are finally starting to get some of those communities to come back. I'm not sure if there's an underlying reason at all, but curious if you can comment on what's happened with rates over the last few months as well.
Speaker Change: Yep, okay. And I'm curious, has anything notable happened with rates over the last couple months? And I think where I'm sort of going with all these questions is what's...
Speaker Change: you know anything changing that's
Speaker Change: increasing or accelerating it sounds like the orders at retail and finally starting to get some of those communities to come back I'm not sure if there's an underlying reason at all but curious if you can comment on on what's happened with rates over the last few months as well
William Boor: Yeah, rates have actually been very stable. They haven't been noticeably dropping. And so to your question, I think there's a couple things going on in my mind. One is, you know, our prospective buyers have been there throughout. We've seen it in the traffic.
Speaker Change: Yeah, rates have actually been very stable. They haven't been noticeably dropping. And so, to your question, I think there's a couple things going on in my mind. One is…
William Boor: There is a need for housing, and they're out there trying to figure out how to make it happen for their family. And so when they get this stability in rates, they at least can understand what their monthly cost is going to be, and it stays in that zone all the way through to get their loan done. And so just the stability has really facilitated traffic turning into orders on the, and I'd say that on the retail side, basically.
Speaker Change: You know, our perspective buyers have been there throughout. We've seen it in the traffic numbers. There's a need for housing. They're out there trying to figure out how to make it happen for their family. And so when they get the stability in rates,
Speaker Change: They at least can understand what their monthly cost is going to be, and it stays in that zone all the way through to get their loan done.
Speaker Change: And so, just the stability has really facilitated.
William Boor: The community improvement is really what we've been talking about. They got slugged with a lot of inventory. It kind of hit them after it hit retailers when we turned to communities and said, The retailers aren't ordering, so here come your homes. And that was kind of a year ago, or a little more, actually. And they're working through that. And as they get inventories under control, to the extent that they're confident in having a resident for any home that they set up, they're starting to kind of order them as fast as they can set them up. So, really, two different dynamics, Greg. I hope I explained that clearly.
Speaker Change: traffic turning into orders on the, you know, I'd say that on the retail side basically. The community improvement is really what we've been talking about. They got slugged with a lot of inventory. It kind of hit them after it hit retailers when we turned to communities and said
Speaker Change: The retailers aren't ordering, so here come your homes, and that was kind of a year ago, or a little more actually, and they're working through that.
Speaker Change: and as they get inventories under control.
Speaker Change: To the extent they're confident in having a resident for any home that they set up, they're starting to kind of order as fast as they can set them up.
Gregory Palm: Yep, yeah, that's great. And then on ASPs, Allison, can you just go through, or I don't know if it was you or Bill, just go through the various, you know, reasons. I think it was mostly mix-related overall, just the number of homes going through company-owned stores, maybe a mix towards, you know, singles versus doubles. But I don't know if you can quantify or just go through that again. That'd be great.
Speaker Change: So really two different dynamics, Greg. I hope I explained that clearly.
Greg Palm: Yep, yeah, that's great. And then.
Speaker Change: on ASPs. Allison, can you just go through, or I don't know if it was you or Bill, just go through the various...
Speaker Change: For reasons I think it was mostly mix related overall, just number of homes going through company owned stores, maybe a mix towards singles versus doubles, but I don't know if you can quantify or just go through that again, that'd be great.
Allison Aden: I would characterize it as primarily a shift more towards single units, which are the lower price. On a like-for-like basis, there was a slight decrease as we do see continued pricing pressure. But as volumes increase, we'll see that subside.
Allison Aden: I would characterize it as primarily a shift more towards single units, which are the lower price. Unlike for light pricing, there was a slight decrease as we do see continued pricing pressure. But as volumes increase, we'll see that subside.
William Boor: Okay, and great, just all right on the point of
William Boor: On the point about our company's retail stores, we've kind of brought that into the mix because as we've grown retail over the last year, it's shifted that a little bit for us. But if you think about it, we put more multi-section through retail, but we put even more single sections through retail. So both grew in our retail operations, but overall, the percent of our homes that went through retail was down as a percentage.
Allison Aden: And Greg, just on the point about our company on retail stores, we've kind of brought that into the mix because as we've grown retail over the last year, it's shifted that a little bit for us.
Speaker Change: But if you think about it, we put more multi-sections...
Greg Palm: through retail. We put even more single sections through retail. So both grew in our retail operations, but overall, the percent of our homes that went through retail was down as a percentage.
William Boor: And so, if you think about our ASP, and maybe I'm stating the obvious, if you think about our ASP, and if period to period you see a lower percent going through retail, then we've got less retail pricing and our ASP and more wholesale pricing. We're automatically just gonna drive the ASP down a little bit. But I think it's a little bit of a cloud because what we're all really interested in is how pricing is holding up. And that's why I wanted to give the perspective that wholesale pricing for our plants was down less than a percent. It's still leaking a little bit, but it has not been that bad.
Speaker Change: And so if you think about our ASP, and maybe I'm stating the obvious, if you think about our ASP...
Speaker Change: If, period to period, you see a lower percent going through retail, then we've got less
Speaker Change: retail pricing and our ASP and more wholesale pricing. We're automatically just going to drive the ASP down a little bit.
Speaker Change: But I think it's a little bit of a cloud because what we're all really interested in is how is pricing holding up. And that's why I wanted to give the perspective that wholesale pricing for our plants was down less than a percent. You know, it's still leaking a little bit, but it has not been that significant.
Gregory Palm: No, I appreciate that. I'm glad you gave me that color.
Gregory Palm: I'll leave it there. Best of luck. Thanks. Thank you. Thank you.
Speaker Change: No, I appreciate that. I'm glad you gave that color. I'll leave it there. Best of luck. Thanks.
Jay Mccanless: Thank you. As a reminder, to ask a question, please press star 1 1. And our next question comes from Jay McCanless of Wedbush. Your line is open.
Speaker Change: Thank you.
Speaker Change: Thank you. As a reminder, to ask a question, please press star 1 1.
Speaker Change: And our next question comes from Jay McCanless of Wedbush. Your line is open.
Jay Mccanless: Hey, everyone. Thanks for taking my question. So, Bill, could we talk a little bit more about the price issue and what your retail stores are seeing right now in terms of price competition from other retailers? How is that shaping up?
Jay McCandless: Hey everyone, thanks for taking my question. So Bill, could we talk a little bit more about the price issue and and what your retail stores are seeing right now in terms of price competition from other retailers? How is that shaping up?
William Boor: Yeah, it's, um, man, it can vary from quarter to quarter; you can see their pricing on average, even if you look at it just single or just multi-section, it can move on your quarter to quarter because they're out there kind of on the street corner competing for deals. And I'll also remind people that, while we've grown in some other areas, we're still pretty concentrated in Texas. So our retail is largely a reflection of the Texas market, not the whole country.
Speaker Change: Yeah, it can vary from quarter to quarter. You can see their pricing on average, even if you look at it just single or just multi-section, it can move on your quarter to quarter because they're out there on kind of on the street corner competing for deals. And I'll also remind people that...
Speaker Change: While we've grown in some other areas, we're still pretty concentrated in Texas.
Speaker Change: And so our retail is largely a reflection of Texas market, not the whole country. And the reason I say that is, I hope I'm not going too far here to lose people, but the reason I say that
William Boor: And the reason I say that is, I hope I'm not going too far here to lose people, but the reason I say that is our retail. If you think of us being in Texas, Texas came out of this downturn a little ahead of other regions. So they're already kind of on the stronger end and improving. So we're not seeing the sequential. What we see in our retail sequentially isn't really reflective of the whole country.
William Boor: Other regions are kind of catching up in a positive way. So I'm not sure if I'm really touching on your question, but, you know, retail pricing for us, mostly focused in Texas, did drop a bit this quarter. It was a factor in that 4% overall ASP, not a huge one, and I wouldn't be too concerned about it because I think it's kind of a normal variation on that street-corner-by-street-corner competition for deals.
Speaker Change: is our retail, if you think of us being in Texas, Texas came out of this downturn a little ahead of other regions. So they were already kind of on the stronger end and improving. So we're not seeing the sequential
Speaker Change: What we see in our retail sequentially isn't really reflective of the whole country. Other regions are kind of catching up in a positive way.
Speaker Change: I'm not sure if I'm really touching on your question but you know retail pricing for us mostly focused in Texas did drop a bit.
Speaker Change: This quarter, it was a factor in that 4% overall ASP, not a huge one, and I wouldn't be too concerned about it because I think it's kind of normal variation on that street corner by street corner competition for deals.
Jay Mccanless: No, that's what I was trying to find out, and thank you for the detail about Texas. But that's where I was trying to get to is what happened with retail pricing. It sounds like it sounds like it's a pretty competitive environment, especially when we're talking about lower-cost single-story homes. Is that the right way to think about it?
Speaker Change: No, that's what I was trying to find out, and thank you for the detail around Texas, but that's where I was trying to get to, is what happened with retail pricing. It sounds like it's a pretty competitive environment, especially when we're talking about lower-cost single-section homes. Is that the right way to think about it?
William Boor: That's right, and I guess you should draw your own judgment. I'm just kind of giving my perspective that when we see variation period-to-period net, I wouldn't get too worked up about it because I think there can be a lot of variability, and in the next quarter, it can bounce up, you know; it's just kind of going to move on us.
Speaker Change: That's right, and I guess you should draw your own judgment. I'm just kind of giving my perspective that when we see variation period-to-period net, I wouldn't get, I don't get too worked up about it because I think there can be a lot of variability and the next quarter it can bounce up, you know, it's just kind of going to move on us.
Jay Mccanless: Got it, okay. Sorry, I'm sorry, Bill. I'll cut you off. Could you say that again? I don't see any.
Speaker Change: Got it, okay, and then on Mark Fusler
William Boor: I don't see any structural or trending issue in that; I think that's just a variation.
Speaker Change: Sorry, I'm sorry Bill, I'll cut you off. Could you say that again?
Speaker Change: I don't see any structural or trending issue in that. I think that's just variation.
Jay Mccanless: It's good to know. Thank you. Secondly, where are chattel rates right now, and where were they maybe a quarter ago and a year ago?
Speaker Change: That's good to know. Thank you.
Speaker Change: Secondly, where are chattel rates right now and where were they maybe a quarter ago and a year ago?
Allison Aden: Yeah, so right now, Jay, they're at 9% to 9.4%. And as Bill mentioned earlier, that is pretty consistent with where they were last quarter and even last year.
Speaker Change: Yeah, so right now, Jay, they're at 9% to 9.4%. And as Bill mentioned earlier, that is pretty consistent with where they were last quarter and even last year.
Jay Mccanless: I mean, if this move that we're seeing in the 10 year turns out to be more permanent than not, and we see it keep going down, how fast do you guys think, whether with Country Place or some of your competitors, how quickly do you think people are gonna try and start bringing rates down?
Jay McCandless: I mean, if this move that we're seeing in the 10-year turns out...
Speaker Change: to be more permanent than not, and we see it keep going down. How fast do you guys think, whether with Country Place or some of y'all's competitors, how quickly do you think people are going to try and start bringing rates down?
William Boor: I think the reaction time on land-home deals, whether they're conforming or non-conforming, would be kind of more correlated. I don't think that I would make any assumption personally about what that'll do to the chattel rates, which are much stickier over time. You know, they really don't react upward or downward in a highly correlated way with the 10-year or any other mortgage index. So we get relief on land-home deals, and certainly GSE costs would, or GSE rates would react, but not necessarily on the chattel.
Speaker Change: I think the reaction time on land-home deals, whether they're conforming or non-conforming, would be kind of more correlated. I don't think that I would make any assumption personally about what that'll do to the chattel rates, which are much stickier over time. You know, they really don't react.
Speaker Change: upward or downward very in a highly correlated way with 10-year or any other mortgage index. So we get relief on land-home deals.
Speaker Change: and certainly GSE costs would or GSE rates would react but not necessarily chattel.
Jay Mccanless: That's great to know. Last one for me on the community business. It sounds like things are finally starting to get better there, but how much longer do you think it's going to take? Another couple quarters till they're back to normal order rates? How are you thinking about that, though?
Speaker Change: Okay, that's great to know. And then...
Bill Boor: Last one for me on the community business. It sounds like things are finally starting to get better there, but how much longer do you think it's going to take, another couple quarters, till they're back to normal order rates? How are you thinking about that, Bill?
William Boor: Yeah, I think that's fair. I mean, it's always dependent on the overall health of the market, for sure, but it's going in a positive way. You know, I remember talking about this when we were having the inventory glut in retail, and we want to think about it as just being a problem one day and gone the next, but how it really happens is you get a critical mass of communities that get back to normal order patterns, and you just kind of stop talking about it because the problem's drifted away from you.
Bill Boor: Yeah, I think that's fair. I mean, it's always dependent on overall health of the market, for sure, but that's going in a positive way.
Speaker Change: You know, I remember talking about this when we were having the inventory glut in retail and you know
Speaker Change: We want to think about it as just being a problem one day and gone the next, but how it really happens is...
Speaker Change: You get a critical mass of communities that get back to...
Jay Mccanless: So, I think, you know, we've been saying for a long time that we thought we'd see improvement by mid-calendar year. That's where we are, and I think it'll continue to improve by the end of the year.
Speaker Change: You know normal order patterns and you just kind of stop talking about it because the problems drifted away from you So I think you know, we've been saying for a long time. We thought we'd see improvement mid calendar year That's where we're at. And I think it'll continue to improve by the end of the year
Jay Mccanless: Good. Great. It's all ahead. Thank you.
Speaker Change: Great. It's all ahead. Thank you.
Daniel Moore: We have a follow-up question from Daniel Moore of CJS Securities. Your line is open.
Speaker Change: We have a follow-up question from Daniel Moore of CJS Securities. Your line is open.
Daniel Moore: Yeah, thanks again, just the favorite, you know, capital allocation, 370 million in cash and growing despite buying back stock. Any, you know, what does the M&A pipeline look like? And what are your thoughts in terms of just aggressiveness in putting the remaining authorization to work? Thank you.
Daniel Moore: Yeah, thanks again. Just a favorite, you know, capital allocation, $370 million cash and growing, despite buying back stock. Any, you know, what's the M&A pipeline look like and what are your thoughts in terms of just aggressiveness of putting the remaining authorization to work? Thank you.
William Boor: Thanks. So, as we shared, stock purchases were about $29 million in the first quarter. That leaves us $97.5 million remaining on the January 2024 board authorization of $100 million. We stay, as always, consistent in our capital allocation strategy. And we continue to put dollars into planned improvement and expanding capacity and efficiencies in our plans. To your point, we continually evaluate an active pipeline of M&A, and that's ongoing. And then we are looking, as we've talked about, for opportunities in our lending operations, and we stay focused on consistency in our capital allocation.
Speaker Change: Yeah, thanks.
Speaker Change: So, as we shared, stock we purchased was about $29 million in the first quarter. That leaves us $97.5 million remaining on the January 2024 board authorization of $100 million.
Speaker Change: We stay, as always, consistent in our capital allocation strategy, and we continue to put dollars into planned improvement and expanding capacity and efficiencies in our plans. To your point, we continually vet and active.
Speaker Change: an active pipeline of M&A and that's ongoing and then we are looking as we've talked about opportunities in our lending operations and you know we stay we stay focused on consistency in our capital allocations.
Daniel Moore: And then the last one, Anthem. Just, you know, any update there? Or should I ask you maybe once a year instead of once a quarter in terms of how you see that kind of wrapping up? Thank you.
Speaker Change: Understood, and then last one, Anthem. Just, you know, any update there, or should we ask maybe once a year instead of once a quarter, in terms of how you see that kind of wrapping up? Thank you.
William Boor: I love the question because it's a product line we're still really excited about, so you can ask every quarter or call us up in between and ask. We're really happy with the receptivity. We are seeing some orders. I don't want to report on the actual numbers.
Speaker Change: I love the question because it's a product line we're still really excited about, so you can ask every quarter or call us up in between and ask.
William Boor: We're seeing a huge number of these kinds of quotes. So it's a process. It takes some time. But I think, you know.
Speaker Change: We're really happy with the receptivity. We are seeing some orders. I don't want to report on the actual numbers. We're seeing a huge number of kind of quotes. So it's a process. It takes some time.
William Boor: I guess it was since the last call. We had homes on the hill. We showed a new single-section duplex, still under the Anthem line at Homes on the Hill, where we set that home up on the lawn in front of the Capitol building. And people were coming through. That's an event we've done, I think, for four years now. And I think that's a game-changing product, maybe even more than the multi-section
Speaker Change: But I think, you know,
Speaker Change: I guess it was since the last call, we had homes on the hill, we showed a new single section.
Speaker Change: Duplex still under the Anthem line at Homes on the Hill where we set that home up on the lawn in front of the Capitol building.
Speaker Change: and people are coming through. That's an event we've done I think four years now and I think that's a game-changing product, maybe even more than the multi-section duplex. So it's going to keep picking up. I think there are going to be
William Boor: So it's going to keep picking up. I think there are going to be... particularly early adopters in the rental community space. We have some things going on there. So I'm not giving you specific numbers, Dan. I really think it's going very well there, and we are starting to sell actual units.
Speaker Change: particularly early adopters in the rental community space. We have some things going on there so I'm not giving you specific numbers Dan I really think it's going very well there and we are starting to sell actual units.
Daniel Moore: Alright, very helpful. I appreciate it. Thank you.
William Boor: Thank you. I'm showing no further questions at this time. I'd like to turn it back to Bill Borrell for closing remarks.
Dan: All right, very helpful, appreciate it.
Dan: Thank you.
Dan: Thank you. I'm showing no further questions at this time. I'd like to turn it back to Bill Borrell for closing remarks.
William Boor: You know, as we've discussed, our internal operating discussions have clearly shifted over the last couple quarters, and we're focused on ramping volume back up in line with orders that we're seeing. It definitely feels good to be having those discussions after a lengthy period of kind of throttling back production. It's important to reflect on how this reduced volume period was managed. I am very complimentary of our operators who were able to maintain healthy gross margins even while running at 60% capacity utilization.
Dan: Great.
Speaker Change: You know, as we've discussed, our internal operating discussions have clearly shifted over the last couple quarters, and we're focused on ramping volume back up in line with orders that we're seeing. It definitely feels good to be having those discussions after a lengthy period of kind of throttling back production.
Speaker Change: It's important to reflect on how this reduced volume period was managed. Very complimentary of our operators who were able to maintain healthy gross margins even while running at 60% capacity utilization.
William Boor: And this wraps up discussions we've had over time about how we work hard to maintain a cost structure that's as variable as possible. I look back over the five quarters that we reported 60% capacity utilization, and during that period, we continued to invest in operational improvement. We repurchased about $140 million of our stock, and our cash balance grew about $80 million. So, as we sit here today, our teams across the company have really managed extremely well waiting for the market to return, and we're very anxious to demonstrate our potential in a stronger environment. I want to thank you for joining us today and for your interest in Cavco, and we look forward to keeping you updated on our progress.
Speaker Change: And this packs up discussions we've had over time about how we work hard to maintain a cost structure that's as variable as possible.
Speaker Change: I look back over the five quarters that we reported 60% capacity utilization, and during that period, we continued to invest in operational improvement. We repurchased about $140 million of our stock, and our cash balance grew about $80 million.
Speaker Change: So, as we sit here today, our teams across the company have really managed extremely well waiting for the market to return, and we're very anxious to demonstrate our potential in a stronger environment.
Speaker Change: I want to thank you for joining us today and for your interest in Cavco, and we look forward to keeping you updated on our progress. Thank you.
Operator: This concludes today's conference call. Thank you for participating, and you may now disconnect.
Speaker Change: This concludes today's conference call. Thank you for participating and you may now disconnect.