Cavco Industries, Inc.

Good day and welcome to the CAVCO Industries second quarter fiscal year 2024 earnings conference call. 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, 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.

Good day, and thank you for joining us for Capco Industries' second quarter fiscal year 2024 earnings conference call. During the 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 comments made during this conference call by management may contain forward-looking statements, 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 that is accurate only as of the date of this live broadcast, Friday, November 3rd, 2023. 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, and thank you for joining us today to review our second quarter results. I thought I'd jump right in with some perspective on what we're seeing in the market. As we previously reported, the dealer inventories that created a big drag on wholesale orders through the first half of the year are now generally under control. In our company-owned stores and broadly throughout our independent dealer network, home buyer interest as reflected in online leads and store traffic is healthy. However, as everyone knows, the macroeconomic environment is not providing any relief for those prospective buyers. Having said that, we continue to see quarter to quarter order improvement. That trend is largely coming from street dealers with communities still lagging as expected and discussed last quarter. Looking forward as those community operators work through their inventories, that will be another positive for wholesale manufactured housing orders. Against that backdrop, we continue to operate at a reduced level. Production was down from last quarter as certain plants dealt with the lack of orders and continued to slow production. In line with production, capacity utilization was down slightly, but still on the range of 60%. With the already mentioned order improvement, we've hit a balance point at the current overall production rate. As a result, our backlogs were consistent with last quarter. We ended the period at $170 million, which equates to five to seven weeks of production. Clearly, we're anxious and prepared to move plants back to full schedules as soon as the market supports. In the meantime, our plants have done an outstanding job maintaining healthy profitability and cash flow through the market challenges. In the second quarter, our housing gross margin was 23.2%, down 1.6% from last quarter and 3.6% from a year ago when we were running full schedules and 80% utilization. Allison will go into the gross margin shifts, but the point here is that reducing shipments about 17% year-over-year to match the lower demand and still maintaining margin to that extent only happens through discipline and operational excellence. Our retail business has performed exceptionally well. They adjusted quickly to the changing market conditions last year and stayed committed to their winning processes. On a same-store basis, excluding the added volume from solitaire retail, Homes sold through our company-owned stores were up slightly from the previous period. More importantly, the manufacturing and retail teams are working cohesively on product decisions and selling strategies to produce optimal results across the operations. This teamwork has demonstrated itself as we've brought the Solitaire stores into the retail operation and filled out product offerings to improve inventory turns. Overall, our revenues were down sequentially from 476 to 452 million, and pre-tax income was 52 million compared to 61 million last quarter. We generated strong cash flow, returned 47 million through share repurchases, and added 25 million to our cash balance. We remain convinced of the dire need for our homes over time, and our strong balance sheet enables us to pursue investments in organic and external opportunities, despite the near-term conditions. With that, I'd like to turn it over to Allison to discuss the financial results in more detail.