Cavco(US:CVCO)2021-08-08 16:15Financial Data and Key Metrics Changes - Revenues increased approximately 30% year-over-year, reaching $330.4 million compared to $254.8 million in the prior year's first quarter [7][15] - Diluted EPS was up about 60%, coming in at $2.92 versus $1.80 in the first quarter of 2021 [7][20] - Consolidated gross profit as a percentage of net revenue was 22.4%, up from 21.7% in the same period last year [18] Business Line Data and Key Metrics Changes - In the factory-built housing segment, net revenue increased 31.2% to $312.3 million from $238.1 million in the prior year quarter, driven by an 18.7% increase in average revenue for homes sold [16] - Financial services segment net revenue increased 8.4% to $18.1 million, mainly due to higher loan sales volume and servicing income [17] Market Data and Key Metrics Changes - Backlogs grew to $792 million, representing approximately 40 weeks of production, with 80% of the backlog growth attributed to high demand and 20% due to reduced production over the past five quarters [12][13] Company Strategy and Development Direction - The company announced the acquisition of Commodore Homes for $140 million, which is expected to expand its footprint into the northeast and increase unit shipments by approximately 25% [8] - Investments in existing plants, such as the Fort Worth plant expansion, are aimed at increasing capacity by about 20% [8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in operational execution and noted that demand remains strong, with backlogs providing a positive outlook [13] - The company is addressing persistent labor and supply challenges while focusing on improving retention and building skills [11] Other Important Information - The company completed its first corporate responsibility report, emphasizing accountability and improvement in stakeholder impact [26] - Cash balance increased to $329.8 million from $322.3 million three months earlier, primarily due to net income and changes in working capital [22] Q&A Session Summary Question: Raw material availability and pain points - Management acknowledged ongoing challenges with raw material availability, particularly with inputs manufactured in the U.S. and logistics disruptions for imports [28][29] Question: Update on automation efforts - Management highlighted optimism regarding automation and process improvements, particularly from the Commodore acquisition [30][31] Question: Additional capacity from plants and acquisition - The Commodore acquisition is expected to provide a significant increase in unit production, estimated at a 25% increase [34] Question: Production increase despite supply chain headwinds - Management remains optimistic about increasing production and addressing labor challenges, aiming to surpass pre-pandemic levels [40][41] Question: Impact of ASP increase - The increase in average selling prices was primarily due to pricing adjustments to cover higher input costs, with minimal impact from product mix [41] Question: Timing for closing the Commodore deal - The acquisition is expected to close in the fiscal quarter of the last calendar quarter, pending regulatory filings [46] Question: Backlog pricing and potential margin expansion - Management indicated that lower input costs would lead to margin expansion, as pricing adjustments have been made to the backlog [51] Question: Labor availability and hiring conditions - Management expressed cautious optimism about improving labor availability, citing job fairs and increased wages as factors [53][55] Question: Realistic production goals post-acquisition - Management indicated that achieving production levels around 4,000 homes per quarter is realistic based on historical performance [56][58] Question: Share repurchase authorization - The company has a remaining authorization of approximately $86 million from a $100 million buyback program initiated last October [59]