Cavco Industries, Inc.

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. 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.

Good day, and thank you for joining us for Capco Industries' first quarter fiscal year 2025 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 Bigby, 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 CAFCO'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, 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 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 and which identifies 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 2nd, 2024. 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 Bohrer, President and Chief Executive Officer. Bill?

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 Ruidoso, New Mexico, combined 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. Insurance is by its nature a volatile business, and it gets a lot of attention when results are down. 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. 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. We understand it, and it adds value both to our retail operations and to our home buyers who need ready access to our policies in order to complete their transaction and protect their homes. Given the losses this quarter, financial services deserve some upfront discussion, and of course, we'll be happy to answer questions. 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. Momentum was building through this quarter. For seven quarters now, we've reported that same-plan 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. 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. The takeaway there is that wholesale pricing has been pretty stable. dropping less than 1 percent. As we've talked in the past, there are a lot of dynamics in our reported ASP, and most of the 4 percent drop is the result of a lower percent of our product going through company-owned stores, 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. 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 section home. 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. There are a startlingly high number of families right on that cusp of being able to afford a home at all. They've been priced out by inflation and rate increases, but 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. 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. 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, I'd like to turn it over to Allison to discuss the financial results in more detail.