Cavco Industries, Inc.

Good day and thank you for standing by. Welcome to the second quarter fiscal year 2022 CAFCO Industries earnings 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. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, I'm Mark Fusler, Director of Financial Reporting and Investor Relations. Please go ahead.

Good day, and thank you for joining us for Capco Industries' second quarter fiscal year 2022 earnings conference call. During the call, you'll be hearing from Bill Bohr, President and Chief Executive Officer, Allison Aiden, Executive Vice President and Chief Financial Officer, and Paul Bigby, 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 Capco'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, which could affect Capco'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 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. This conference call also contains time-sensitive information It is accurate only as of the date of this live broadcast, Friday, November 5th, 2021. CAPCO undertakes no obligation to revise or update any forward-looking statement, whether written or oral, to reflect actual 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 our Bill Bohr, President and Chief Executive Officer. Bill?

Thank you, Mark. Welcome, and thank you for joining us today to review our results for the second quarter of fiscal year 2022. We're very happy to report another record quarter for revenue and earnings. Revenue increased 39% year-over-year and diluted EPS was up nearly 150%. We also achieved a record housing gross margin of 24.1%. This was partly due to average selling price continuing its upward trajectory with a 13% sequential increase. and partly due to the temporary low we saw in lumber and OSB pricing that flowed through our costs of goods sold during the quarter. Demand for our products remained strong, and our backlogs continued to grow. Excluding Commodore, backlogs were $828 million, and the acquisition added another $279 million, putting the total at $1.1 billion. This represents about 40 to 42 weeks of production. New home supply has lagged for many years leading to a large housing deficit, particularly for lower cost homes. Demographics and low interest rates continue to underpin the strong demand we're experiencing. And as the cost for supply and labor inputs increase, the efficiency advantages of factory-built housing relative to site-built are increasing as well. This all results in a very positive and growing opportunity for our industry. By any measure, we're seeing continued strong demand and can sell every house we can make. Regarding production, it won't surprise anyone on the call that supply issues have not let up, and they're affecting nearly every material we use to build homes. How much I can add to the information we're all hearing about availability of imports as well as domestically produced supplies. We have no ability to predict how long, but expect the situation will persist for some time. Our teams continue to do a great job managing through it and working to minimize the significant impact this has had on production. Labor difficulties also continue to negatively impact production. However, because of the holistic approach we've been taking to address root causes with fundamental and lasting solutions, we're beginning to see signs of improvement in staffing and retention. We've implemented increased wages and benefits, but equally as important, we're investing in recruiting, onboarding, and training processes. The labor issues faced by nearly all manufacturers are complex, and we're building systems and approaches that we believe will provide advantages long term. That kind of fundamental systemic work is how we're building our team skills. In addition to this intense focus on labor solutions, our plant teams are continuing to simplify product offerings in order to increase volume for our customers. Strategically, we've pushed forward by taking action across the spectrum of our investment priorities. Our recent investment in Fort Worth is a great example of improving process flow to enable increased production. That investment is well on its way to improving throughput by approximately 20%. We're working to identify and pursue any opportunities to make similar investments across our network of plants. With regard to our previously announced Glendale project, we have incurred permitting delays that have moved our start of production to the second quarter of calendar year 2022. The good news is that we've now received the necessary permits and are executing on the build-out. This project will both nearly double our park model production in Arizona and free up a production line for incremental HUD capacity at our Goodyear plant. On the acquisition front, we closed on the Commodore transaction during the quarter, a little ahead of the planned third quarter timeline. After just a month and a half since the closing, integration is going well, and we could not be happier about joining forces with the people at Commodore. Beyond the geographic expansion and 25% increase in capacity this deal brings, I remain as excited as ever about the manufacturing technologies and the best practices we'll be applying across the combined company. The challenges that have limited production have hidden the fact that our plants are improving their efficiencies. For example, our hours per floor produced have improved this year as our plants demonstrate their ability to drive through this period of understaffing and intermittent high absenteeism. As we solve these issues and as supplies become more reliable, we're poised to see a new level of plant throughput. So strategically, we have not paused, and we're looking forward to playing an increasing role in addressing the affordable housing issues that are facing prospective homebuyers. Today we have our new CFO, Allison Aden, with us on the call. She's been here for just a couple months now, and we're very happy to have her on board. With that, I'll turn it over to Allison to discuss the quarterly results in more detail.