Cavco Industries, Inc. (NASDAQ:CVCO) Q3 2023 Earnings Call Transcript

Daniel Moore: No, that’s very helpful. Kind of switching gears, I guess, a little bit. Backlog about nine to 11 weeks. Do you — how should we think about production over the next, say, one to two quarters? Do you expect to curtail production given the decline in backlogs? Are you comfortable continuing to produce over 4,000 homes before we — obviously, before we add layer in Solitaire, given the order rates that you’re seeing, just trying to think about how you’re kind of managing that backlog versus when you need to see a significant uptick in orders.

Bill Boor: Yeah. It’s probably a really important question to talk about for a minute because the last couple of years, we reported backlog numbers and it was just across the board, right? I mean everything was going up, and it didn’t — there wasn’t much differentiation region to region, and it didn’t really matter because the numbers were big, right, Dan. But to expand on your question a little bit and give you a little bit more flavor, when we do that kind of estimate of weeks, that’s very much an average now in a situation like this. And the situation does vary from plant to plant, region to region, meaning we do have plants that have considerably less backlog, and we’ve got some that have very, very strong backlogs. So I told you in the scripted part of the call that we did have some market downtime this past quarter.

And that takes different forms, extended holiday outages that we took advantage of where backlogs were lower. And some of our plants, a good number of our plants, actually, have adjusted to four day work weeks. So that was what was going and that kind of lowered our running time of available days to about 84%. And we’re continuing in that mode until those individual plants that see even the lower end backlog in weeks, they start to see it stabilize and come up. So a very long winded kind of conceptual answer to you, but I do expect that we’ll still not operate all available days. But as we see cancellations abate and get closer to a 1:1 flow-through of homebuyer orders, which I think is happening every day. And if we get kind of the seasonal order pickup that we’re starting to see signs of, that’s all good news for reducing that market downtime.

Just I’ll throw this in, again, we’re always a little bit hesitant to get into the mode of giving up to the minute updates on these calls. We’d like to focus on the quarter we’re reporting on. But I did comment on quotes being significantly up. Also kind of tell you that we looked at orders written, right, not net of cancellations. And last few weeks, they’ve been honestly comparable to about late summer, early fall of last year. So I’m going to keep qualifying my statements at a couple of data points doesn’t mean we’re out of the woods by any means, but they’re good data points.

Daniel Moore: No, that’s really helpful, Bill. I guess and I know you don’t want to get into the exact guidance in terms of production number of units. But it sounds like Q4, the last quarter was a reasonable proxy for where we will be, give or take, in the short term versus a big leg down or anything of that nature?

Bill Boor: Yes.

Daniel Moore: Lastly, maybe one or two more ASPs, just expectations as raw materials come down, we expect those to continue to tick modestly lower?