Cavco Industries, Inc.

fiscal year 2023 casco industries inc 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 1 1 on your telephone please be advised that today's conference is being recorded i would now like to hand the conference over to mark fusler director of financial reporting and investor relations Please go ahead.

Good day, and thank you for joining us for Capco Industries' first quarter fiscal year 2020 earnings conference call. During this call, you'll be hearing from Bill Bohr, President and Chief Executive Officer, Allison Aden, Executive Vice President and Chief Financial Officer, and Paul Digby, 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 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 which 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 CAFCO. I encourage you to review CAFCO's filings with the Securities and Exchange Commission, including without limitation the company's most recent forms 10-A 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 that is accurate only as of the date of this live broadcast, say August 5th, 2022. CAFCO undertakes no obligation to revise or update any forward-looking statement, whether written or oral, to reflect events or circumstances after the date of this conference call, except as required by law. Now I'd like to turn the call over to Bill Bohr, President and Chief Executive Officer. Bill?

Welcome, everyone, and thank you for joining us today to review our results for the first quarter of 2023. CAFCO is happy to report another very strong quarter with record revenue and net income. Net income was up 121% year-over-year and 12% compared to the fourth quarter. For many quarters, we've been asked about our ability to exceed pre-pandemic levels of productivity, and this quarter we reached over 85% capacity utilization. More tangibly, we shipped a record 5,346 homes this quarter, 44.5% more than a year ago. I really want to congratulate our manufacturing organization, which has set and exceeded aggressive production targets. We pride ourselves on operating excellence, and it's great to see it showing up so clearly in our results. We are very well positioned for and confident in the demand drivers for our products, despite the affordability impact of high prices and increasing rates. While near-term market dynamics are shifting, some of those dynamics actually play in favor of manufactured housing. Affordability is extremely stretched for our prospective buyers, but this doesn't eliminate the fundamental need for more housing units, particularly at low price ranges. Certainly, some would-be buyers are getting priced out of ownership in the near term. However, they still need homes. Community operators who continue to have aggressive growth plans are providing a solution with single-family manufactured housing rental homes. Also, first-time buyers are increasingly turning to manufactured housing as an alternative to site-built homes, given the rapid escalation in starter home costs. Manufactured housing is an option those buyers might not have considered in the past, however, now they are, and they're finding attractive, energy efficient, and high quality homes that meet their needs. Looking at total housing market indicators risk missing the point that the needs are far greater where we provide solutions. For example, recent listing data show that while overall new listings are up about 20%, which indicates a shift to a buyer's market, Listings for homes below $250,000 continued to decline 10% to 20% in June. I recognize that while you're interested in these bigger picture dynamics, you're probably particularly interested in what's going on right now. In the near term, order rates are down, and production is running faster than the pace of setting new homes in the field. As a result, our backlog ended the quarter at 25 to 27 weeks compared to four weeks last quarter. Keep in mind that 25 plus week backlogs are pretty healthy. The backlog dropped approximately 10% from $1.1 billion to $1 billion. That drop was comprised of approximately 15% fewer units and 5% higher average selling prices. Prospective buyers are feeling the effects of economic uncertainty and inflation. They see that previously anticipated rate increases have already occurred and delivery times are shortening. So the urgency we've seen from a buyer to quickly get an order in has abated to some degree. While retail traffic is still strong, reflecting the underlying need, buyers have become more patient, resulting in lower deposit ratios. Retail inventories are up compared to recent periods due to a combination of difficulties getting homes set and accelerated deliveries as production rates have improved. We're anticipating a near-term reset of retail inventories, which means orders may drop below true buyer demand for what I expect to be a short time frame. Just to reiterate, prices and interest rates are high, so the monthly payment impact is clearly a downward pressure on near-term demand. This is offset by lack of supply of lower-priced homes, market share gains for manufactured housing at price point site builders simply can't hit anymore, and aggressive community growth plans, which are less sensitive to the recent rate changes. To provide a project update, our new Glendale, Arizona factory is nearing completion. The plant looks great, and we've been recruiting and training people at our nearby Goodyear factory, so we're ready for a successful startup. The new plant at Hamlet, North Carolina, is also coming along very well. We expect a smooth transition as the previous owner wraps up their production and we complete plant modifications to begin ours. The goal from the beginning for both VBC, who's the previous owner of Hamlet, and Capco has been to minimize any break in employment for the people at Hamlet, and we're confident that we're on track to do that. Both projects will be state-of-the-art facilities and equally important, I'm very excited that they will both have model work systems and cultures. Great work has been done to ready these operations for startup, and both plants will begin production in the coming months. With that, I'll turn it over to Alison to discuss the quarterly results in more detail.