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

Bill Boor: Yeah. I’ve kind of always maybe a little bit of an outlier on this question because I read a little bit less to materials and being a direct relationship and a little bit more to how backlogs are going and how competitive it gets for manufacturing orders. And there, again, I apologize that I can’t give you a generalized answer, but it really is playing out in local markets. We have seen some markets where backlogs dropped quickly and to lower levels where there’s been some tax sliding on price. And we’ve seen in others where it just doesn’t make sense to reduce price because the backlog still remain or the issue of dealer inventories is really what’s restricting orders, not a reduction in price. So again, hard to generalize. We are in a more competitive environment in some geographies and this backlog stabilize, I think we’ll be able to make it through this with not a lot of price leakage.

Daniel Moore: Very helpful. Lastly for me, I’ll jump out. Allison, I apologize. There were some disturbance and I missed what you said about SG&A. It was lower in the quarter sequentially. What were the factors and just how do we think about what the run rate maybe including Solitaire.

Allison Aden: Yeah. Thank you. Apologies for the background noise. Lower sequentially due to the reduction in third-party expenses. Third quarter last year, we were right in the middle of our tax energy credit efficient project. So we had a large outflow for support on that by third parties by the offset of then commissions and variable compensation that we have been slow with based on all of these. So basically, SG&A still being the component of about 40% that’s variable, now we can leverage as we expand and contract.

Daniel Moore: Okay. I’ll jump back if any follow-ups. Thank you.

Mark Fusler: Thanks, Dan.

Operator: Thank you. And our next question will come from Danny Eggerichs from Craig-Hallum. Your line is open.

Danny Eggerichs: Yeah. On for Greg Palm today. Thanks for taking the questions. I was hoping to just hit on that last one real quick on SG&A. I mean, it still was quite a bit lower than the Street was modeling here. So I guess before layering on Solitaire, is that say, $59 million number, a more reasonable baseline to go off of?

Allison Aden: I think the current quarter that we just left kind of represents more of a steady state, if you will. We did absorbed a year ago, an amount that was significant as we talked about because we were going and working with very expertise on the third-party side for the tax credits. What you’re seeing now is a more relatively related consistent level. There always has a fluctuation on SG&A, which helps our model because 40% of it is variable compensation and commission structure as is the industry that will ebb and flow with the revenue. So if you modeled at a level of SG&A revenues now, probably a realistic picture.

Danny Eggerichs: Okay. That’s helpful. I guess, just kind of in terms of the overall demand backdrop, maybe for that current quarter, what kind of cadence you saw throughout the months? I appreciate the color on January. It sounds like starting to see things pick up. And then maybe just more broadly, I guess, realistic scenarios for industry shipments for the calendar year ’23.

Bill Boor: Yeah. It’s a million dollar question, last one. What’s the question on the cadence in the last quarter?

Danny Eggerichs: Just for this fiscal quarter three, how, I guess, more of a monthly cadence, how you saw that play out throughout the quarter?