Cavco Industries, Inc.

Ladies and gentlemen, thank you for standing by, and welcome to the CADCO Industries, Inc., third quarter fiscal year 2020 earnings webcast conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference to your speaker today, Mark Fusler, Director of Financial Reporting and Investor Relations. Please go ahead, sir.

Good afternoon, and thank you for joining us for Capco Industries' third quarter fiscal year 2020 earnings conference call. During the call, you'll be hearing from Bill Boor, President and Chief Executive Officer, Dan Ernest, Executive Vice President and Chief Financial Officer, and Josh Borsetti, Chief Accounting Officer. Before we begin, We'd like to remind you that the comments made during this conference call by management may contain forward-looking statements under the provisions of the Private Securities Litigation Reform Act of 1995, including statements of expectations or assumptions about CABCO's financial and operational performance, revenues, earnings per share, cash flow or use, cost savings, and operational efficiencies. All forward-looking statements involve risks and uncertainties, which could affect CABCO's actual results and could cause its actual results to materially differ from those expressed in any forward-looking statements made by or on behalf of Capco. I encourage you to review Capco'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 the forward-looking statements. Some factors that may cause the company's results May affect the company's results include, but are not limited to, the risk of litigation or regulatory action arising from the subpoenas we receive from the SEC, potential reputational damage that Capco may suffer as a result of matters under inquiry, adverse industry conditions, our involvement in vertically integrated lines of business, including manufactured housing, consumer finance, commercial finance, and insurance, market forces and housing demand fluctuations, are business and operations being concentrated in specific geographic regions, loss of any of our executive officers, federal government shutdowns, and extensive regulation affecting manufactured housing. This conference call also contains time-sensitive information that is accurate only as of the date of this live broadcast, Friday, January 31st, 2020. CAFCO undertakes no obligation to revise or update any forward-looking statements to reflect I would like to turn the call over to Bill Boor, President and Chief Executive Officer. Bill?

Thank you and welcome, everyone. The message this quarter is one of continuing consumer demand and strong results from our operations who are doing a great job focusing on quality service and profitability. Very good demand stemming from the strong economy and well-documented demographic drivers continue to leave us optimistic about the industry as a whole and our prospects going forward. The big picture for the industry will continue to be driven by over eight years of underbuilding, particularly under supply of affordable units, as well as by pent-up household formation demand. The long-term need for affordable housing is real and growing, and our efforts are aimed at being part of the solution. December's industry M8 shipment data is not yet in. Looking at the second half of the calendar 2019, basically July through November, industry shipments are up nearly 4%. So while the full year shipments will be deceiving because of the first half retail inventory reduction, the year-over-year comparisons are starting to clear up and show growth in demand. We've seen that in our wholesale sales, and we've seen that in our retail operations where traffic is up year-over-year. In last quarter's call, we commented that we were expecting backlogs in demand to carry us through the winter into the spring selling season. Three months later, our backlog has held up well at six weeks, and it's enabled us to grow shipments. Turning to financial services, our teams had another outstanding quarter. In insurance, there weren't any major weather events impacting our policy areas. However, this shouldn't overshadow how well our team at Standard Casualty is balancing growth and risk diversification. To consider their results as solely driven by weather doesn't do justice to the great job they've been doing through time. Similarly, the lending operation is contributing strong results, not solely due to interest rates and home buying demand, but in large part due to the steady and smart approach to growth and risk management. Paying attention to details is everything in these financial services operations, and our teams are simply doing an outstanding job. Regarding the broader lending environment, I don't have much to add to what I expect the participants on the call are already following. The GSEs remain constructive through their duty to serve commitments. Having said that, it shouldn't be surprising that it takes time for programs like Choice Home and MH Advantage to gain momentum. These are very good programs that are making a difference, and we certainly appreciate the level of commitment by the GSEs. Similarly, investor appetite and the prospect for a more robust Secondary Market for MH Loans is building. All of these developments continue to move in the right direction. And finally, I'd simply like to add a comment that recognizes the improving regulatory environment. HUD continues to make positive strides on behalf of the industry through reduced regulatory barriers, as well as a streamlined process for code updates, and these are important changes. These changes reduce cost, and they result in a much more efficient process to get deserving families into quality homes. So with that, I'll turn it over to Dan Ernest to review the financial results.