Cavco Industries, Inc.

Ladies and gentlemen, thank you for standing by. Welcome to the second quarter fiscal year 2027 CAFCO Industries 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. And 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. and to withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would like now to turn the conference over to 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 2027 earnings conference call. During this call, you'll be hearing from Bill Boor, President and Chief Executive Officer Allison Aden, Executive Vice President and Chief Financial Officer, and myself. Before we begin, we'd like to remind you that comments made during this conference call by management may contain forward-looking statements. Forward-looking statements include statements about our expected and future business and financial performance and are not promises or guarantees of future performance. They are expectations or assumptions about CABCO'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 four looking statements involve risks and uncertainties which could affect CAFCO's actual results and could cause its actual results to differ materially from those expressed in any four looking statements made by or on behalf of CAFCO. For discussion of material risks and important factors that could affect our actual results, Please refer to those contained in our filings with the SEC, which are also available on our investor relations website and at SEC.gov. This conference call also contains time-sensitive information that is accurate only as of the date of this live broadcast, Friday, October 30, 2026. CAPCO 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 Boor, President and Chief Executive Officer.

Bill? Thanks, Mark. Welcome and thank you for joining us today to review our second quarter results for fiscal 2027. In the first quarter, we reported unit shipment and revenue records, and now in the second quarter, we were able to better those records. I'll stop short of implying that the market is strong. It isn't. However, this quarter orders continued to exceed our pace of shipments, resulting in another sequential increase in our backlog. We're entering the winter months and orders are slowing as they typically do. At the same time across the system, the end of quarter backlog averaged a healthy eight to 10 weeks. Overall, we're shipping more than last year. Orders are slowing but are well above last year's levels and our backlog is 63% higher. Heading into winter, we're in good position to lean in on production where backlogs allow, knowing we can respond to changing markets as needed. And to provide some context about orders, on a same plant basis, we were up high single digits compared to last year, and down sequentially from a very strong Q1. In the second quarter, we shipped a record 5,972 homes. Last quarter, revenue exceeded $600 million for the first time, and this quarter it was up another 7.6% to $656 million. And year-over-year revenue was up about 17.9%. Our capacity utilization was about 75%, still well below levels we're able to sustain. So from a longer-term perspective, there remains significant room to reach higher volumes, which I think is important given the regulatory momentum and the continuing affordable housing supply deficit. Factory-built gross margin increased 30 basis points from last quarter. This was a good outcome given ongoing materials inflation. While differential across operating areas, we saw product pricing increase enough to offset the negative margin impact of growing materials costs. And to be clear about consolidated average selling price, the overall increase was from both single section and multi-section homes selling at higher prices rather than driven by changes in product or distribution mix. It's important we discuss the increasing role being played by data center workforce housing in our orders, shipments and backlogs. Data center orders and shipments increase significantly during the quarter. Like any other channel, we don't intend to specifically break out the units and orders, but I want to talk through how this dynamic impacted the quarter. First, because we had healthy backlogs going into the quarter, there was not a net meaningful impact on shipments. In other words, had we not seen these workforce housing orders, we had plenty of other business and would have shipped a similar overall volume. Regarding price, these units are generally single sections and they have a higher price than typical single section homes. So there was an upward effect on average selling price. But having said that, my earlier comments about sequential product price increases still hold true for the base residential units. Workforce housing shipments added to what would have already been an increase in product pricing. Shifting to margin, the pricing is higher on workforce housing mainly because the material cost of a unit is significantly higher. Generally, these units are built with six or seven self-contained living spaces with in-room toilets and showers. Taking all of this into account, there was no meaningful impact on our percent gross margin resulting from the workforce housing shipments. Higher price, higher cost, neutral impact on gross margin percent. The big positive of these incremental workforce housing orders is that they're adding to the backlog, thereby enabling us to lean in on production despite heading into the winter months and with continued economic uncertainty. Overall, this is a developing opportunity, and frankly, we don't have a clear view about how much this will grow, how susceptible the orders may be to delays or cancellations, or how long we'll see a meaningful level of remote data center projects. Switching gears, I want to acknowledge the contribution our financial services operations continue to make. There's not a lot to discuss here except the continuing strong performance. Overall pre-tax profit was up a couple percent over a very good quarter last year. Insurance had another in a string of strong quarters with low claims. We're also benefiting from reduced reinsurance costs due to both the general reinsurance market improving and our dramatic improvement in claims performance the last couple years. Country Place Mortgage continued to ramp up originations after securing new investors for loan purchases, which we've mentioned in previous quarters. In shifting to capital allocation, we repurchased $30 million of company stock in the quarter. Since initiating our repurchases just over five years ago, we've returned $642 million to our shareholders through buybacks without hampering any strategic growth investment in our plants, green fields, Acquisitions, or otherwise. In Q2, we surpassed cumulative repurchases of 20% of our shares over that time, and we finished the quarter with a healthy $272 million of unrestricted cash. Now I'll turn it over to Allison to give more details on the financial results.