Cavco(US:CVCO)2022-08-05 22:01Financial Data and Key Metrics Changes - Net income increased by 121% year-over-year and 12% compared to the fourth quarter [7] - Net revenue for the period was $588.3 million, up 78.1% from $330.4 million in the previous year [19] - Consolidated gross profit as a percentage of net revenue was 24.6%, up from 22.4% in the same period last year [23] Business Line Data and Key Metrics Changes - Factory built housing segment net revenue increased by 83.4% to $572.6 million, driven by the addition of Commodore operations and a 26.9% increase in average revenue per home sold [20] - Financial services segment net revenue decreased by 13.2% to $15.7 million due to unrealized losses on marketable equity securities and decreased loan sales volume [22] Market Data and Key Metrics Changes - Backlog ended the quarter at 25 to 27 weeks compared to four weeks last quarter, with a drop of approximately 10% from $1.1 billion to $1 billion [13][14] - Retail traffic remains strong, but buyers have become more patient, resulting in lower deposit ratios [15] Company Strategy and Development Direction - The company is well-positioned for demand drivers despite high prices and increasing rates, focusing on manufactured housing as an affordable solution [9][11] - New manufacturing facilities in Glendale, Arizona, and Hamlet, North Carolina, are nearing completion, expected to begin operations in the coming months [17][18] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the economic uncertainty and inflation affecting prospective buyers but emphasizes the ongoing need for affordable housing [9][79] - The company anticipates a near-term reset of retail inventories, with orders potentially dropping below true buyer demand for a short timeframe [15] Other Important Information - The company executed nearly $39 million of stock repurchases, completing the previously authorized $100 million program [29] - An additional $100 million for future share repurchases was authorized by the Board [30] - The company reached an agreement in principle with the SEC to settle litigation, pending final approval [35] Q&A Session Summary Question: Growth rate in shipments and organic growth - Management confirmed organic growth in the number of homes sold is in the mid to high teens, excluding Commodore [38] Question: Moderation of order rates - Management indicated that orders are off the highs but are comparable to pre-pandemic levels with appropriate seasonality [40] Question: Impact of lower financial services profitability and Commodore pricing - Management noted that the lower financial services profitability and Commodore pricing are expected to impact margins, with a drag of about 200 basis points from Commodore [48] Question: Sustainability of production levels - Management expressed confidence in sustaining production levels above 5,000 units, citing improvements in staffing and supply chain conditions [74]