Cavco (CVCO) Q2 2027 Earnings Call Transcript

Image source: The Motley Fool.

DATE

Friday, Oct. 30, 2026

CALL PARTICIPANTS

• Corporate Controller and Investor Relations-Mark Fusler
• President and Chief Executive Officer-William C. Boor
• Executive Vice President and Chief Financial Officer-Allison K. Aden

TAKEAWAYS

• Net Revenue -- $656.4 million, growing 17.9% year over year driven by increased home sales volume and higher average selling prices.
• Diluted EPS -- $7.17, up from $6.55 in the prior year period, reflecting a $0.70 per share benefit from a one-time insurance premium return.
• Factory-Built Housing Revenue -- $633.7 million, increasing 18.4% due to the integration of American Homestar and organic volume growth.
• Financial Services Revenue -- $22.6 million, rising 5.8% year over year on higher loan sales in the mortgage division.
• Homes Sold -- 5,972 units, representing a 15.3% increase compared to the same period last year.
• Revenue Per Home Sold -- $106,118, growing 2.7% primarily due to product pricing increases and higher prices for single-section homes.
• Backlog -- $348 million, reflecting a sequential increase of $50 million and representing approximately 8 to 10 weeks of production.
• Capacity Utilization -- 75%, remaining consistent with the prior year level while providing room for additional volume growth.
• Consolidated Gross Margin -- 22.5%, declining from 24.2% in the prior year period due to higher material input costs.
• Factory-Built Housing Gross Margin -- 21.1%, down 180 basis points year over year as materials inflation partially offset pricing gains.
• Financial Services Gross Margin -- 60.2%, an increase from 55.6% driven by improved underwriting margins and lower reinsurance costs.
• SG&A Expenses -- $77.7 million, representing 11.8% of net revenue compared to 13% in the prior year quarter.
• Stock Repurchases -- $30 million, part of a cumulative $642 million returned to shareholders since the program's initiation five years ago.
• Unrestricted Cash -- $272 million, providing liquidity for future strategic growth and capital improvements.
• Capital Expenditures -- $29.7 million, primarily focused on plant improvements and the new El Mirage facility.
• Pretax Profit -- $73.4 million, up 9.1% year over year despite rising material costs.
• Operating Cash Flow -- $96.4 million, generated through core business operations during the second quarter.
• Effective Tax Rate -- 24.4%, up from 22.1% in the prior year due to lower tax credits.
• Workforce Housing Wholesale Price -- $70,000 to $100,000, representing the price range for single-section units used in data center projects.
• Legacy Brand Shipments -- Low single digits, representing organic growth on a same-plant basis excluding recent acquisitions.

Need a quote from a Motley Fool analyst? Email pr@fool.com

RISKS

• Boor warned that regarding data center workforce housing, "we do not have clear view about how much this will grow. How susceptible the orders may be to delays or cancellations," noting the early stage of this market development.

SUMMARY

Cavco Industries, Inc. (NASDAQ:CVCO) reported record quarterly revenue and unit shipments for the second consecutive quarter, primarily driven by the integration of the American Homestar acquisition and increased demand in the factory-built housing segment. Management reported that while overall market conditions remain soft, order rates exceeded shipments during the period, resulting in a sequential increase in backlog and a 63% rise compared to the prior year. The company is experiencing a significant increase in orders for data center workforce housing, which management identified as a developing opportunity for high-volume, single-section units with higher material content. Financial results were influenced by a one-time insurance premium refund and ongoing materials inflation, particularly in steel costs, which management mitigated through localized price adjustments. The company maintains steady capacity utilization and continues to invest in production expansion, including the El Mirage facility scheduled for completion in mid-2027.

• Management reported that workforce housing units for remote data centers are typically single-section homes containing six to seven rooms with individual toilets and showers.
• CEO Boor stated, "A big positive of these incremental workforce housing orders is that they are adding to the backlog. Thereby enabling us to lean in on production despite heading into the winter months."
• The company reduced its reinsurance costs due to improved claims performance and favorable shifts in the broader reinsurance market.
• Management is monitoring the Road to Housing Act and demonstrated the first off-chassis HUD-code home, the Grande Arbor, at a national housing showcase.
• CEO Boor indicated that manufactured housing is gaining opportunity as site builders move away from first-time buyer price points to focus on move-up buyers.
• The company indicated that when it sells an internally manufactured home to its own retail locations, the transaction is conducted on a market basis and arm's length basis.

INDUSTRY GLOSSARY

• HUD-code home: Manufactured homes built to the federal standards established by the U.S. Department of Housing and Urban Development.
• Off-chassis: A construction method where a factory-built home is removed from its permanent steel frame or chassis during installation on a site.
• Chattel rates: Interest rates on loans for personal property, specifically used for manufactured homes when the land is not part of the security.
• GSEs: Government-sponsored enterprises, specifically Fannie Mae and Freddie Mac.
• Singlewide: A manufactured home consisting of one single section.
• Multi-section: A manufactured home consisting of two or more sections joined together at the home site.
• Road to Housing Act: Federal legislation aimed at increasing the supply of manufactured housing and improving its integration into local housing markets.

Full Conference Call Transcript

Operator: Ladies and gentlemen, thank you for standing by. Welcome to the Second Quarter Fiscal Year 27 Capco Industries Earnings Call Webcast. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a Q&A session. And to ask a question during the session, you would need to press *11 on your telephone. You would then hear an automated message advising your hand is raised. And to withdraw your question, please press *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.

Mark Fusler: Good day, and thank you for joining us for Capco Second Quarter Fiscal Year 27 Earnings Conference Call. During this call, you will 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 would 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 Cavco'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 forward-looking statements involve risks and uncertainties, which could affect Cavco's actual results and could cause its actual results to differ materially from those expressed in any forward-looking statements made by or on behalf of Cavco. For a 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, 10/30/2026. Cavco 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 would like to turn the call over to Bill Boor, President and Chief Executive Officer. Bill?

William C. Boor: Thanks, Mark. Welcome, and thank you for joining us today to review our second quarter results for fiscal 27. 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 will stop short of implying the market is strong. It is not. However, the quarter orders can. This quarter, orders continued to exceed our pace of shipments. Resulting in another sequential increase in our backlog. We are entering the winter months, orders are slowing as they typically do. At the same time across the system, the end of quarter backlog averaged a healthy 8 to 10 weeks.

Overall, we are 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 are 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 5.97 thousand 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 are 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 is important we discuss the increasing role being played by data center workforce housing in our orders, shipments, and backlogs. Data center orders and shipments increased significantly during the quarter. Like any other channel, we do not 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 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 of material costs of a unit is significantly higher.

Generally, these units are built with 6 or 7 self contained living space 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 are 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 do not have clear view about how much this will grow. How susceptible the orders may be to delays or cancellations.

Or how long we will see a meaningful level of remote data center projects. Switching gears, I wanna acknowledge the contribution our financial services operations continue to make. there is 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 are 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 have mentioned in previous quarters.

And shifting to capital allocation, we repurchased $30 million of company stock in the quarter. Since initiating our repurchases just over 5 years ago, we have returned $642 million to our shareholders through buybacks without hampering any strategic growth investment in our plants, greenfields, 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 will turn it over to Allison to give more details on the financial results.

Allison K. Aden: Thank you, Bill. Net revenue for the second fiscal quarter of 27 was $656 million up 18% compared to $556.5 million during the prior year period. Sequentially, net revenues increased $46.4 million driven by a higher units sold and higher average revenue per home sold. Within the factory built housing segment, net revenue was $633.5 million up $98.6 million or 18.4% from $535.1 million in the prior year quarter. This increase was primarily due to the addition of American Homestar, an increase in legacy homes sold, and an increase in legacy average revenue per home sold.

The increase in legacy average revenue per home was primarily due to product pricing increases, partially offset by a lower proportion of homes sold through our company owned stores and more singlewides in the mix. Financial Services segment net revenue was $22.6 million up $1.2 million or 5.6% from $21.4 million in the prior year quarter. This increase was due to higher loan sales in our mortgage division. Consolidated gross margin in the second fiscal quarter as a percentage of net revenue was 22.5% down from 24.2% in the same period last year. In the factory built housing segment, the gross profit was 21.1% in Q2 of 27 slightly down from 22.9% in Q2 of 26.

The reduction is due to higher input costs partially offset by increased product pricing. Financial services gross margin as a percentage of revenue increased to 60.2% in Q2 of 27 from 55.6% in Q2 of 26. Driven primarily by improved underwriting margins Selling, general and administrative expenses in the second quarter of 27 were $77.7 million or 11.8% of net revenue. Compared to $72.2 million or 13% of net revenue during the same quarter last year. The increase in these costs was primarily due to the addition of American Homestar, along with increased compensation and employee benefit expense.

These expense increases were partially offset by a $7 million onetime return of premiums related to additional D&O insurance that was purchased back in 2019. Interest income for the second quarter was $3.6 million down from $5 million in the prior year quarter. Resulting from lower cash balances after the purchase of American Homestar. Pretax profit was up 9.1% this quarter to $73.4 million from $67.3 million for the prior year period. The effective income tax rate was 24.4% for the second fiscal quarter compared to 22.1% in the same period of the prior year. The increase in the effective rate was primarily driven by lower tax credits compared to the prior year quarter.

Net income was $55.4 million versus $52.4 million in the same quarter of the prior year and diluted earnings per share this quarter was $17.17 compared to $6.55 in last year's second quarter. During the quarter, we repurchased $30 million of common shares under our board authorized share repurchase program. Leaving approximately $158 million under authorization for future repurchases. Now I will turn it over to Mark to discuss the balance sheet.

Mark Fusler: Thanks, Allison. In the quarter, we had an increase in cash and restricted cash of $31.7 million bringing our balance to $297.9 million Cash provided by operating activities was $96.4 million Cash used in investing activities was $33.8 million primarily related to plant improvements and related equipment, and cash used in financing activities was $30.9 million primarily due to share repurchases.

Comparing the 9/26/2026 balance sheet to 3/28/2026 accounts receivable increased from greater homes sold, inventories increased from raw material purchases in anticipation of increased costs, Prepaid expenses and other current assets decreased from expected tax refunds, property, plant, and equipment increased from investment in the new El Mirage facility in addition to other plant improvement projects, Accrued expenses and other current liabilities increased from higher customer deposits, volume rebates, and warranty accruals on higher sales, and treasury stock increased due to stock buybacks, executed in the period. Now I will turn it back to Bill.

William C. Boor: Thank you, Mark. With this report, we have hit a year since joining forces with American Homestar. And thus far, that acquisition has exceeded expectations with higher than assumed tangible synergies and rapid increases in productivity. A lot of hard work has gotten us to this point. A couple weeks ago, I was able to spend several days with the plants and stores that came to us in the acquisition and the teamwork and focus on making the right products for the market has been tremendous.

As we move into comparable periods, we will not be specifically highlighting the operations going forward, so I want to take a quick opportunity to really thank everyone involved in such a successful acquisition and integration. On another note, since our last earnings call, we showed the first off chassis home at HUD's Innovative Housing Showcase in Washington DC. Earlier this week, HUD secretary Scott Turner, and US congressman Eli Crane visited our Phoenix plant to discuss Cavco's readiness to provide innovative products that are being enabled by the Road to Housing Act. I can tell you my message was we are ready, so let's figure out how to get these things out there.

But while we manage the near-term business, We are also working very hard on the huge opportunities that lie ahead. Michelle, could you please open the line for questions?

Operator: To be announced. And to withdraw your question, please press *11 again. And our first question comes from Dan Moore with CJS Securities. Your line is open.

Dan Moore: Good afternoon, or I should say good morning, Bill, Allison and Mark. Appreciate all the color. Yeah. Just the components of growth. You ship 15% more homes year over year in the quarter compared to HUD code shipments in the low single digits. Can you just kind of break out organic versus the contribution from American Homestar?

Allison K. Aden: Yeah. We had. Yeah. Thanks, Dan. So we did have increase in our legacy brand as well. So kind of the low single digits. Yeah.

William C. Boor: 1 thing, 1 thing it is going to be. I know there is gonna be a ton of interest as there should be in workforce housing. 1 thing I will point out to folks is that you know, again, we are early in this. We are trying to figure it out. We are gonna try to share information as we can on the magnitude and all that. 1 thing that is probably gonna be a little bit of a complication as people interpret the industry is that the vast majority of those units will not be HUD code.

So when you are looking at HUD code and then comparing any participants, shipments and sales there is gonna be a little disconnect due to that gap. But, you know, I would characterize that these as I said, like, from a shipments perspective in the quarter, I think this is relevant to your question, Dan. We had a good backlog going into the quarter. And if we had not shipped you know, workforce housing units this quarter, we would have worked on our backlog that we had in kind of the normal single family residential units. So from my perspective, looking back at the quarter, it was gonna be about in that same range regardless. Does that make sense?

Dan Moore: Absolutely does. I think you are reading my sheet of questions, as it relates to workforce housing question here. So you are you are you are jumping ahead of me. But that is helpful. I will hold back. No. All good. All good. Taking, you know, another 10 thousand-foot view, you know, it seems like. And maybe workforce housing is skewing it a little. But if you look at growth relative to certainly site built, seems to be diverging even more, you know. So Yeah. Are you seeing more. Whether it is opportunities community by community, maybe more early impact of road to housing. You know, do you see that.

Are we seeing evidence that we are sort of breaking away from the overall housing market, if you will?

William C. Boor: No. It certainly seems like in the near term, there is divergence And we have talked over time that while we are subject to a lot of the same macro effects and macro forces, the business models are clearly different, and the customer base is clearly different. I. I would hesitate to say we are seeing the early effects of Road to Housing because I think it is too early. We are pushing to try to work with HUD and others to figure out how we can really put that law into action with things like, you know, the products we can make off chassis. But at this point, I would not attribute much of any deviation there.

I have tried to keep up on the site builders as they have announced and folks like you have had comments on their performance. It really is different. I mean, my understanding is they have had you know, some level of spec building that now they are trying to ease back on. We do not have that in our industry. You know, our industry is kind of a pull structure where a customer has to make an order and it flows back to us and we make it.

So we are not having those kinds of headwinds that I think they have The other thing, in my view, and I am trying to think through this just like you guys are, In my view, our customers, you know, they are. Many of them are just trying to find the time when they can get approved for a loan and buy a house. And so they have been out there. We have told you for a long time that traffic has been healthy. People are out there trying to find the opportunity to buy a home.

So there is quite a bit of like, I do not know, pent up or demand that is sitting on the benches. it is waiting to come forward. And we have kind of, you know, I think we have kind of seen that come forward a little bit recently. And maybe that is different. I do not -- you can be the judge. Maybe that is different than a site builder where their buyers might, especially if it is a move up buyer, they might have a little bit more discretion and thought about when they pull the trigger.

So, you know, I do not know if I can simply explain it, but those are some thoughts about the differences between the 2 businesses and you know, I know they are struggling because they have offered incentives for quite a long time. And as much as they try to get off them, they are having difficulty doing that. A lot of those factors just are not part of our business model, and I think we are showing a little bit more of a steady road right now because of that. Super helpful.

Dan Moore: I have 2 more. I will jump out. Just given the increase in backlog, are you. are we thinking about holding production relatively steady kind of going into the winter months? there is usually some seasonality, but you know, same time in the last few quarters, you have been saying we are gonna lean into this increasing orders and increase production. How should we think. How are you thinking about the next quarter or 2 here?

William C. Boor: Yeah. I probably always drive you guys crazy because I say it is kind of plant-dependent. But I will say that we have fewer and fewer plants that do not have the kind of backlog where they can consider increasing production. I mean, we are pretty healthy across our system with just a couple plants that have lean backlogs at the moment. So, yeah, the tug of war is that going into these winter months every year, you hear us say oh, we do not know what the winter's gonna hold, and it is a little ways before spring selling season. So that causes you know, our teams and our leaders to be hesitant. But as I said, once.

The big positive workforce housing is it is added to our backlog, And to your point, you know, I am of the mindset, and I think all of our leadership is of the mindset that gives us the ability to push a little bit. And we do that with confidence because we have seen our organization know how to adjust if they have to. So, yeah, my you know, our tone in the company is let's work on this backlog. Let's not let it you know, in 1 scenario, you do not want it to run away from you and get big. Would be wishful thinking and hopeful. But let's not let it get big. Get big.

Let's push production, even though we are heading into the winter months. That is really helpful.

Dan Moore: Last 1. Maybe Allison, but just factory built gross margin, you know, slight improvements sequentially. Obviously, raw material general inflation is not going away. So, just your expectations regarding kinda trajectory, from where we were this quarter over the next maybe quarter or 2?

Allison K. Aden: Yeah. Sure. Appreciate the. In our last quarter, I think we indicated that material costs were increasing. And we said that the bigger unknown was really the extent to which the industry orders and the capacity utilization would enable you know, price increases to offset the pricing costs. And in Q2, we, in fact, were fortunate and price increases were available So that is how our, you know, margin was able to grow by 40 basis points. And just to kind of, you know, focus on the point on material escalation, steel, which is up almost 150%, if you will, since the beginning of the year.

Separate from the gross margin discussion, there is obviously availability risk that we are also managing. So as we think about Q3 and forward, you know, we are in the same position as we were last quarter. Material inflation is. Seems more of a probability and a risk. And just on the price side, there is also areas where price we can take increases. But it is a local by local event as we have always said. And as winter months hit, we cannot be sure, you know, if continued price increases will be available or if the ASP will fully offset you know, what is likely to be continued material inflation.

So, you know, as we always talk about consistently, it is a little hard to project the gross margins and really, what we stay focused on is the business model, and that is our ability to really leverage our variable cost. And continue to take pricing increases where we can.

Dan Moore: Alright. I promise I would jump out. I will circle back with any follow ups. Thank you.

William C. Boor: Thanks, Dan.

Operator: Thank you. And our next question will come from Greg Palm with Craig-Hallum. Your line is now open.

Greg Palm: Yeah. Thanks. I am going to try to beat a dead horse here and ask a few more on workforce housing, even though it does not sound like you wanna quantify much. But I guess first, I am curious. what types of structures are you building for the industry, and what exactly constitutes a unit?

William C. Boor: Yeah. it is an interesting question. I am learning a lot real time, to be honest, so I can share what I believe to be the best understanding on that. there is really and others might correct me on this, but here's what I know. Greg, that think about it in 3 buckets. 1 bucket is when a project is in construction, they need what is really temporary you know, construction worker, construction office type structures. And you know, we provide some of those. that is probably over time, that is gonna be a relatively small part of what gets built. And those structures may move to the next project. Right? They are just kind of temporary.

Then there is another relatively small component that is and, you know, where we are getting opportunities really is remote data centers. Right? We are not getting opportunities to build housing in cities where there are some data centers. But where it is remote, the kind of leadership team, those kind of people, need housing. And those I would tell you to think of as kind of a single-family residential unit. Looks very much like we make typically.

What we are finding out is that while you hear that data center employment might be relatively low, there actually is a large need for people to maintain clean keep the facility updated, and that is where I think we are gonna see the most sizable component of workforce housing. And the things that the units we are making come in different shapes and sizes for sure, but think of a single wide that if you look at it like, head on the long side of the single wide, you see 6 or 7 rooms that have their own bathroom facility, their own shower. But there is like 6 or 7 lined up in a single way.

And then on-site, those might be positioned with a corridor down the middle. that is where we are seeing a lot of the probably, the biggest component of the volume. And as I said earlier, you know, those units are not gonna show up in the HUD code numbers. So it makes it a little bit tough to track how companies are doing if this becomes a big component of overall demand. But does that give you a feel for it?

Greg Palm: Yeah. And, I guess, specifically, I just wanna make sure I am understanding this right. So 1 single unit might have like, 6 or 7 rooms. So I guess what would the ASP on something like that be? Because I am guessing that is way, way more than a traditional single wide.

William C. Boor: Yeah. Yeah. And there is a range about what we are seeing. I mean, we are seeing kind of generally under $100 thousand wholesale, but can be in the $70 thousand to $100 thousand wholesale. And that is what I tried to explain in the prepared comments because now as I have described that, you know, 7 showers, 7 toilets, 7 sinks, the material costs go up. that is why the pricing is up. And when you kinda net it all out, including labor and you know, these things are running fairly well through our plants once you kinda get to once your team gets a feel for how to make them, it is not really slowing us down much.

So when you have that higher materials cost, your gross margin effect is really not when you consolidate it with the rest of the company, it is kind of right in line.

Greg Palm: Yep. Okay. In terms of like, geographic, is there a certain region where you are seeing the most activity? And just, you know, overall, can you at least -- you know, I know there is maybe limited visibility somewhat and things are happening on the fly, but, you know, presumably, you have you have some sort of pipeline or contracts you are working against, right?

William C. Boor: Yeah. We have got a few different intermediaries, really. it is almost like selling through a dealer. We have got a few intermediaries and we have seen a lot of volume in Texas area, but I would not tell you that it is isolated to that. And over time, we are starting to see it spread out into other regions. So I do not think it is gonna be an incredibly localized thing, but early on, some of the bigger projects we have been involved in have been kind of in remote areas of Texas.

Greg Palm: Okay. Alright. Maybe just 1 non-workforce housing question, then I will hop back. But last quarter, you mentioned, you know, going back to the HUD code business, price competition, I think that was tied mostly to Texas. I do not know. Now it sounds like maybe you did not mention that, so maybe it is lessened. But now maybe the industry is focused on this other sort of category, so maybe that lessens the risk going forward. But what are you what are you seeing?

William C. Boor: Tiny object syndrome. Yeah. Yeah. You are citing back to the comments we made about retail, I believe, last quarter. Yeah. Correct. Even as we talked about it, I just kinda getting shaky and nervous that people are gonna really focus on it because we brought it up. We brought it up because it was a meaningful impact on our consolidated margins. We felt people needed to hear about it. But what I tried to say then is, you know, these markets are moving. And we were seeing increased wholesale pricing And we focus on Texas in this discussion only because so much of our retail is focused there. Right? that is not a statement necessarily about Texas.

But we are seeing wholesale prices continue to rise in Texas and we were seeing on the retail side a lot of competition for the buyers that were out there. So their pricing was not going up commensurate with that. And I tried to frame that as you know, I think this. We are explaining it. You think you need to know about it. But we also think this is a market in transition a moment in time. If we fast forward to what happened this quarter, I think we have got some positive indications that it was a moment in time. However, like, what we have continued to see is the wholesale pricing is going up to our retailers.

And for everybody's knowledge, when we sell an internal manufactured home from 1 of our plants to our retail, we do it on a market basis and arm's length basis. So I think it really reflects what is going on in the market. So their invoice cost of that purchased home into retail has been rising. But we saw this quarter the retail price start to go up as well. And net, the margin was still kind of in the same ballpark in retail as it was previously.

But the fact that the prices are starting to move up I think, is a good indication that this is something we keep our eye on, but we are not expecting it to be like an ongoing systemic issue.

Greg Palm: Okay. Understood. Thanks for the color.

Operator: Alright. Thank you. And our next question is going to come from John Lovallo with UBS. Your line's open.

John Lovallo: Hey, guys. Thank you for taking my questions as well. The first 1 is just in our conversations with folks across the industry, it seems like there are some market participants that have been at least somewhat less enthusiastic about participating in workforce housing. It seems to us like the ASP is pretty solid. I guess I am curious how the profitability compares. And, also, you know, is there any risk to just kinda damaging the brand by doing this type of product? I am just trying to figure out why others would not be, you know, more inclined to participate.

William C. Boor: Yeah. I am not sure I could answer why someone might be less inclined. As we talked about the gross margin's kind of right in our wheelhouse, so I am not worried about profitability. You know, the 1 thing that I think we need to be careful about and are being very careful about is we are not we are not just loading all these orders into 1 or a few plants to the point where they are not able to take care of their independent dealer customers. Or their community customers.

So, you know, that would be a potential risk if a company just like, kind of made all the rest of their business wait while they just focused on workforce housing. it is not to the magnitude, and we are being very mindful about trying to basically put these orders. Spread these orders in our system smartly so that we are not hurting our independent dealer customers. From a brand perspective, I am not sure I see it.

I mean, we are still gonna make a quality unit it is obviously a very different application. it is not 1 that a customer is really gonna be confused by. it is not gonna be something that they are seeing in their neighborhood, for example. So I think it is kind of a nice opportunity and this industry in Capco through time and through history, we have done workforce housing for oil fields as an example. And it is just you know, times like this, it is really welcome because it is added orders that give you that extra backlog.

John Lovallo: Yeah. That makes sense to me. Next question is on the 21st Century Road to Housing Act obviously received a lot of attention, but there was a recent executive order It was called decreasing housing costs for the American people that included provisions, many of which were aimed at increasing coordination across federal agencies, also support for innovation and standardizing some of the permitting for manufactured housing. Any thoughts on these initiatives and how meaningful they could be for the industry?

William C. Boor: Yeah. I am kind of in a little bit of wait and see mode, and that is not any pessimism. But the executive order by its very nature, is somewhat general. And like you said, it was directional for some of the government agencies in different areas. Yeah. There were aspects of it that are on things like you know, automatically eliminating mortgage interest when someone's equity gets to a certain level. You know, if there is a impact on us from something like that, it is not even secondary. You know. And I think directionally, you can get on board with the idea of let's not have people paying out of their pockets for something not needed.

But probably the most interesting 1, but there is very definite. Very little definite around it is the task force. That the president kind of assigned to HUD and, I guess, was FHFA to co-chair to just look at opportunities in factory built housing to make the regulatory and inspection and approval processes more efficient. You know, from my 2 cents, and I feel a little bit like I am sticking my neck out on something I have not learned enough about. But for my 2¢, manufactured housing under the HUD code is kind of a model for that kind of efficiency.

So if that task force starts to look at other areas like modular or hybrid, systems, I think that could be something at least to some good outcomes for affordable housing in general. So we would be all for it. But it is still general, and so I am not sure I have really a well informed opinion about it at this point, John.

John Lovallo: Got it. Got it. Last 1 from my end and just going back to an earlier question on sort of the divergence between on-site and manufactured housing in terms of demand. Wondering if you could sort of pinpoint what the core buyer has looked like more recently. I mean, are these folks former renters? Are they just more rate sensitive folks? Is there an average wage bracket that you are seeing? I mean, anything that might help explain the difference?

William C. Boor: Yeah. We tend to think in a broad strokes that we have got kind of 2 core customer groups. 1 is that first-time buyer low income, relatively low income, and they need a good affordable house and they are they are trying to just figure out if they can get out of rent. Right? So that. that is definitely big part of the market. And the other tends to be actually kind of retirees. 55 and older people. Maybe they are downsizing. Maybe they are getting a second home for snowbirding. Right? And that still holds true. And I do not think that we have identified or noticed any like, structural trend about new customers.

I think if there is 1, and we have struggled to quantify this for ourselves and for you guys. If there is 1, it is the buyer who historically would have only looked at site built homes and because site builders are unable to hit first-time buyer price points and they are actually moving up and away from those price points, some of those customers are finding their way to manufacture housing and they are liking what they see and they are buying. From us.

So if there is any trend that I would point to and it is a little bit of an empty statement because I cannot quantify it, I do think we are getting more opportunity at what we consider the high price points and a site builder considers the low price points. 1 thing I have noticed in the earnings releases over the last quarter. Couple quarters with homebuilders is a is a number of them talking about we are gonna skew a little bit away from first, what they call first-time buyers and a little bit more into first time move up. When I hear that as a manufactured housing person, that sounds like opportunity.

It sounds like they continue to move up in price and if we can get access to the locations that those buyers wanna live, that is true opportunity for us, and I think that is a shift out of all the customer dynamics you are asking about. that is very helpful.

John Lovallo: Appreciate the thoughts. Thanks.

Operator: Thank you. And the next question is going to come from Jesse Lederman with Zelman. Your line is open.

Jesse Lederman: Hey. Thanks for taking the questions, and nice job in the quarter. Thanks. Really exciting on the workforce housing opportunity. I wanted to ask a couple clarifying questions. 1's for Mark on the low single digit increase that he noted earlier on shipments. I was not sure if that was referring to the organic increase or if that was the American HomeStar increase and then the remainder I guess would be, like, low double digits, would be the organic during the quarter?

Mark Fusler: Yeah. I was referring to the legacy. So yeah, the same plant. Same plants. Yeah. If we go back to the consistent plan group Okay.

Jesse Lederman: So the organic, I guess, in other words, or legacy was up low single digits and the rest is American Homestar? that is right. Okay. Alright. that is helpful. Thank you.

Allison K. Aden: Another clarifying 1 on singlewides, Allison. I think you mentioned on the ASP, part of what partially offset the increase in like for like pricing was perhaps more single wides in the mix. Whereas I think we previously had discussed over the last few quarters, really, more of a shift to the multi section homes. So I would love for any more commentary on kind of the. What the price point mix during the quarter and then also what do you think is driving it and, what your expectations for that is going forward? Yeah.

I think it is a little bit of that, as Bill mentioned too, is that some of the buyers that are coming in are looking you know, at what they can afford. And so we are seeing some go to the more single wide. But still the pricing is held and I think our ability to really focus on our pricing structure that is allowing us to pass through the increase on the materials is really kind of the key element to focus on.

Jesse Lederman: Okay. Got it.

William C. Boor: That makes you know, I mean, that mix can bounce around. You are right. I mean, for a while, if I go back a little bit farther, for a while, it was leaning toward singles and it leaned toward multis, and now we have had a quarter or 2 where even when you take out the workforce housing, it was still leaning a little bit more toward singles. Mhmm. I do not have a really great answer for that except when hindsight, when we see some of those movements and we look back over time, you kinda have to chalk it up to normal variation, to be honest.

But the interesting thing this quarter with price, and I am hammering a point we have already made Mhmm. Is we have had plenty of quarters where we have seen a little uptick in price. So we have had to tell everybody yeah, that was really product mix and it was really degree of integration with our company-owned stores. It was not really product price. And this quarter, it is the opposite. And I think it is important for people to hear that like, the single wides and the multi sections are both selling at a higher price than they were previously. Absolutely. I think that is a helpful distinction.

Jesse Lederman: what is your sense on that? Obviously, we know, like, a lot of potential buyers are in and current renters who may wanna buy are constrained from an affordability perspective and from inflation and all these different things. Your sense for the consumer's ability now at retail, like, if retail is gonna pass along those price increases too, what is the what is the ability for the potential buyer to absorb any further increases?

William C. Boor: Yeah. I think that is the point. I mean, on. From a business perspective, you know, when we are looking at it, just in isolation, pricing sounds great. But to your point, it is making it harder for folks. So yeah, we are very conscious of that. And you know, your point's very well taken. And what is hard to understand is what would be the demand sensitivity to a small increase or a small reduction in price. But as I always point out, it is a local market. And so you know, I think sometimes people think that there is some kind of pricing power where we can just decide to go raise or lower the price.

I think this price. This product these product markets are much more efficient than that. And you know, right now the price is going up and it is making it harder for folks for sure. If they get a little interest rate relief, that is huge too. Right? I mean, that can offset that effect pretty quickly. And I hesitate to say it because it is not a trend now, in the last few weeks, we have seen a slight downward movement interest rates that might offset their monthly cost effect of the price increase.

Jesse Lederman: Okay. that is helpful, Bill. Thanks. 1 follow-up on the on the interest rate stuff. I know you have talked about the chattel rates being stickier. But presumably, it does still kind of get benchmarked to some degree. Like, over the last month or. Months even before we kinda had this pullback, I would assume shadow rates grew because of what we were seeing on the 30 year mortgage rate. So what is kind of the time frame through which the chat. I know it is stickier, but, like, how quickly is it actually almost repricing up or down when the 30 year mortgage rate is moving especially when there is such volatility as we have seen lately?

William C. Boor: Yeah. My feeling is it is pretty sticky. I do not think it responds very quickly, and it will move a little and then it will stay there for a while. So it is not very responsive. I think you are right that it is somehow correlated, but it is not an immediate reaction. Now you know, we have talked a lot about you know, what you need really for that market to become efficient is for some kind of secondary market. And the GSEs, you know, we are still trying our hardest to get the GSEs to take note of that and start buying home only loans. Who knows if and when we will ever get a breakthrough there.

But the other thing, just like we have told folks that we have got investors are new investors, probably more appropriate investors, than we have had in the past for those loans. that is helpful too. Right? If people like us Totally. The country place are out there finding flow through investment, money that is probably tied to insurance liabilities so they can offset a similar term. Then that helps the market become more efficient too. So I am kind of waiting to see where this goes and maybe the coming years it might be. But, you know, maybe we are moving toward a more efficient market. Got it.

Jesse Lederman: Yeah. We are eagerly watching to see what the GSEs do as well as it pertains to the channel rates. Last 1 for me. Really appreciate all the help as always. It almost sounded like when you were talking about the backlog and you were saying, you know, if we did not take the workforce orders, we kind of would have ended up in a similar place anyway, which kind of sounds like you maybe had some orders that you did not accept because -- like, you almost took the workforce housing orders in lieu of other potential orders or demand.

So I just wanna allow for you to maybe clarify if that is right and whether or not you are almost taking a step. You need to for 1 reason or another it does not seem like you do. You are only, I guess, at 75% capacity utilization. Of course, a strong number, but still room to go. Just love your clarity on that.

William C. Boor: Yeah. I am glad you asked the question because I would not have I would not have been sensitive to that possible confusion. By no means are we not taking other orders. So my point was that you know, we are at a healthy backlog level. We are not at a high backlog level. We are a become a problem for customers. You know, if you go back in time and you are, like, pushing a year, that is an issue. But we are at 8 to 10 weeks and heading into the winter months, we are still taking all the orders.

The backlog just kinda helps us with that dynamic we talked about earlier where a given plant is kind of concerned that they are going into the winter season and they know how strong orders are gonna be. With workforce housing, adds a little to their backlog on top of taking all the other orders, it helps us lean in a little bit harder on production. So, yeah, by no means do I want people to feel like we are taking 1 order over the other. We are not in that mode at this point. Okay. Thanks again. Really appreciate it all of you. Justin. Have a great weekend. You too.

Operator: And our next question will come from Tyler Batory with Oppenheimer. Your line is open.

Analyst: Hey. Good morning. Thanks for taking my questions. First 1 for me, I will continue the trend here on the workforce housing topic. Is there a lot of competition for this business? Are you mostly competing with other manufactured housing producers or with different types of temporary housing And then from your perspective, what helps you win this business, and what differentiates you from some of the others that might be trying to get into this space?

William C. Boor: Yeah. it is interesting and good question. Yeah. I am sure we are not the only ones getting workforce housing business, so I want that to be perceived You know, it is it is it is competitive to some extent. There are at this point kind of intermediaries that are finding the opportunities with the projects and then kinda talking to the manufactured housing type companies to produce them. So it is kind of a very natural market in that sense. But. And your other question it is not my perception that for a given remote data center, they would be looking at some other form of housing.

I think factory-built is the appropriate housing or the appropriate construction method for that stuff. So I think it is in our wheelhouse as an industry. And I am sure it is competitive. what is making the difference, I think, is as it is with any sale. Right? it is an intermediary coming to us and it is a pricing discussion. it is a when can you deliver discussion. And all the things that we would face if we were dealing with a land lease community or any other customer. Okay. Okay. Thank you. And then in terms of the order and demand commentary, I mean, obviously, you have the workforce housing that is coming in.

You talked about orders below last quarter's pace. Just how much of that deceleration is normal seasonality? Just wanna confirm that there is not any sort of change in underlying demand outside of what is happening with workforce housing. Yeah. it is a great question. Yeah. We talked about a drop off, and it is really thinking sequentially, right, from Q1. And I will remind people sometimes when you have those comparisons, you think that the drop off saying something negative about the current quarter when you are comparing to a quarter that was pretty darn strong. And Q1 was strong.

We had I do not remember what we disclosed as far as the sequential uptick, but we had a couple quarters where we were you know, significantly into double digit increases quarter to quarter. So a little bit of this is the comparison to a very strong Q1 in orders And then, yes, absolutely, seasonality. We would typically see Q2 be a little bit slower than Q1 from a seasonality perspective. I guess the put it in some perspective, I would say that orders this quarter are very much in the range of what we have seen the last couple of years.

In the last couple years, we have always prospectively been racking our brains trying to figure out where is this going because been a lot of uncertainty in the market. But when you look back, we have kinda been in the zone. And our second quarter orders are not out of line with that zone. it is not like they have fallen off a cliff. And I am talking about excluding workforce housing. So it is not strong, but the level of orders is still manageable and as I said repeatedly, I think it is it is in a range that we are very able to adjust up or down from here. Okay. Okay. Very helpful.

And then my last question, just the capacity addition that you have coming online mid-27, Just remind us how much spending is left there then help us think about just what the ramp up looks like in terms of initial earnings contribution and when you really kinda get to a more stabilized level of production there? Yeah. We have not been out with actual capital numbers on that. The start-up is still pretty much online for some time like, mid calendar next year. You know, projects have risk there, but I think we have been able to manage this 1 where so far we stayed roughly on schedule. it is gonna be a big.

Initially, it will be 1 production line, but it will be a sizable production line as far as capacity and throughput. So, you know, we have not really put projections out to isolate that 1 production line to give specific numbers at this point. Okay. Very good. That. that is all for me. Thank you. Hey, Tyler. I will make 1 more point on your previous question. Just because I am looking at some of the data as I answered, and I think everything I said kinda put it contextually in the right place. But maybe 1 play. 1 way to think about Q2 orders is that they were slightly up year over year.

So even while we saw a drop off from that very strong Q1 year over year, you know, this is definitely. We are not trying to tell people we have seen a drop off a cliff here. Thank you.

Operator: And our next question comes from Katherine Lapey with Gabelli Funds. Your line is now open. Little bit about the 75. Hello? Oh, I am sorry. Can you hear us?

William C. Boor: Yes. Can you hear me? Yes. Okay. Thank you. Awesome. Thanks again for taking my question, and congrats again as well on the great quarter. Thank you. Could you talk a little bit about the 75% capacity utilization in light of the strong 8 to 10 week backlog. So I am wondering what is holding up the capacity utilization what would get that number to 80, 85, 90%. Yeah. it is kind of that dynamic we have been talking about. I mean, we have been -- if you look at the last year or so, we have been kind of increasing that number a little bit. We your capacity utilization is not a perfect number.

And so we do tend to round it off a little bit when we communicate it. And the other thing about it is that as we do projects, and we have been doing a lot of projects in our existing plant system, But we adjust up the denominator. Right? So it is a moving target when you really think about the pieces and parts of it. So we have been in that 75% range, but I think over time on an increasing view of total capacity. And that is why we. You have seen us increase the total amount we put out. what is holding it up is this whole dynamic. Well, 2 things I would say.

1 is I have definitely observed that it seems a lot easier to reduce product pace than it is to increase it. Usually, when we are in the opposite mode, can allow attrition to bring your staffing levels down, and you can kind of adjust down pretty rapidly. When you are going the other direction, it can be more challenging. Now you are hiring people, training them, and trying to go up. We are good at managing that, but that is a dynamic that always is at play. And then the other thing is that yeah, backlogs have been increasing. And but. And they are at a good healthy level right now.

But when you are heading into winter months, there is that question in a given plan of, is now the time to increase, or should we just kinda hang out at this level and see and wait for spring to decide when to increase? So that is. Those are the kind of plant by plant discussions we have and every 1 of our plants is in a different place on that. We have got some plants that are basically producing relatively full. They have been at you know, 80 plus percent for a while. We have got other plants that have a thinner backlog. That have not you know, we have not together decided to push production very hard yet.

Given their backlog and their market dynamics. So it is all this tug of war between are we entering a slowing period? Is the backlog big enough to bridge it? You know, all that goes into the decisions about how hard to push the production. Okay. Greg. Thanks. Just a quick follow-up on that. Would you say that the workforce housing orders are targeting a specific sector of plants? Like, are they closer to the plants that are already at that 80, 85% capacity utilization? Or is the location of the workforce housing gonna help with some of the plants with leaner backlogs, or is it just pretty variable and hard to tell? it is a little bit variable.

I mean, the projects are where they are. We probably have plants that can reach them. No matter where they are because I think our system covers the landscape pretty well. But this kind of ties, Catherine, into some comment I made subtly earlier. I think that was that we are able to -- and I think that our guys are doing a great job at this We are able to take in sizable orders and then think about where we are gonna produce them. Even if we break that order up and make it in a couple plants, So it does relate to this capacity utilization dynamic.

And if we have got a plant that is full, we are gonna look to try to move those orders still gonna be relatively in the same region. But move those orders to where we have got more upside in the capacity utilization. Greg. Yeah. That makes a lot of sense. Thanks.

Analyst: Just 1 last question for me. I would love to hear a little more on the breakdown of CapEx this quarter, particularly how much is attributable to El Mirage and then how much is just kind of steady CapEx? That we can expect in the future?

Allison K. Aden: Yeah. I think if you look at this quarter, and last quarter, you do see kind of a tick up from the last 3. The previous 3 quarters, which represents kind of the maintenance level So I think that just by looking at historically, while it is not the increase would not be completely attributable to the El Mirage, because we always have several projects in some phase of capital improvement. But I think that directionally kinda gives you the an indicator of the investment that we are making.

I think the key is that when we looked at El Mirage, you know, we did what we do with all of our major product decisions, and that is go through a pretty labor intensive, you know, return calculation. But at the end of the day, the capital spending per capacity for El Mirage is gonna be right in line with historically the way that we have laid capital out for capacity addition.

William C. Boor: Allison, if you had to throw a number out for, like, sustaining capital, it is probably 8, maybe as high as 10.

Allison K. Aden: Between 8 and 9, I usually. And you can see that is slightly over the D&A, so that kind of proves out what the maintenance capital has to be.

Analyst: Awesome. Thank you very much. that is super helpful.

William C. Boor: Yeah. Allison's point, we have got projects going on in our plants too. We have you know, individually, they are all relatively small. From a total company level, but we have done so many of them that they are always sneaking into those numbers as well. But important. Yeah. Thanks, Catherine.

Analyst: Greg.

Operator: Thank you. Have a nice weekend. You too. Thank you. And the next question is gonna come from Gus Gibas with Northland Securities. Your line is open.

Analyst: Hi, Bill, Allison, Mark. Thanks for taking the questions. Congrats on the results. You know, wanted to. You know, you noted federal and state level support, not only with the Road to Housing Act, but also other reforms that you expect to open exciting opportunities in the years ahead. I imagine that is in reference to, you know, zoning regulations, better financing access, but maybe to provide a little more clarity, was wondering what you are most excited about and, you know, if there is any potential developments along those lines that we should keep an eye out for.

William C. Boor: Yeah. Good question. You know, at the. I am excited about what is going on federally. Obviously, it is not over with the Road to Housing Act, and people are already talking about Road 2.0 and what might be involved in that. So we continue to have momentum there, and I think we have talked a lot about that. But probably equally as excited about the trends we are seeing at the state level where more and more states are passing state level laws to try to even the playing field for factory built housing to get into you know, it is a zoning issue to get into areas we have really been kept out of in the past.

So I do not even know if I could put 1 ahead of the other. I think both of those are pretty much equally exciting and both are equally important. You know, road to housing at some level is allowing us to make the products that fit into you know, urban and close end markets. And the state level work is probably more where the rubber hits the road to give us access to those markets. So really, we need both. We are getting good support in both areas, and that is what I think is going to really change the game. Makes sense and good to hear.

You know, I was gonna ask about workforce housing orders, but, I think that is been addressed. So, you know, what are your plans maybe for other off chassis HUD homes? You know, how can you maybe speak to the demand or interest how that is trended following the unveiling of the Grand Arbor? And kinda how the pipeline looks for future home designs? Yeah. it is noticeably from my perspective and my conversations with traditional developers, people that maybe are small and in a certain location that have spent their careers doing site built projects. They are perking up at the idea of you know, maybe I should switch to manufactured housing.

And if I can get low sets and 2 stories, you know, it really seems to have captured the imagination and attention of those kinds of builders. And we have had I can tell you since the law passed, we have had several projects that have come to us to learn and talk about whether that is the next opportunity, which is why it is so important to continue pushing on like, let's get the rule making done if that is what it takes or let's get some efficient alternate construction letter process in place so that we can start selling these things. But yeah. I think that is what it is opening up.

People are excited about 2 story officially made you know, HUD code house and certainly ground set Yeah. Good to hear.

Analyst: Thanks again. Appreciate it. Alright.

Operator: Thank you. And our last question is going to come from Dan Moore with CJS Securities. Your line's out. Open.

Dan Moore: I know you -- after an hour and 2 minutes, So I started this off. You are gonna finish this off here. I will make it quick. This is the first quarter we have heard about it in a more meaningful way. So just Yeah. You talk to like the number of intermediaries? Is that growing that you are you know, interacting with, or in discussions with over the last 1, 3, 6 months. Just kinda trying to get a second derivative momentum, you know, idea of how this is kinda playing out in real time.

William C. Boor: Yeah. And we have not been hiding the ball. I mean, I will tell you, it really kinda hit this quarter for us. I mean, this is the quarter that it was even really a thing as far as really tangible shipments tangible orders. Yeah. I think the intermediaries are gonna grow. I mean, we have worked with a couple in these early days but I just think this is gonna continue to unfold, and I do not think it is gonna ultimately be just a few people that are intermediaries between the manufacturing housing companies and the data center projects. So we are wading into it. We have got some key relationships at this point.

I think we will expand that as we go forward. But as I said in my comments, it is very hard to predict. How long how stable, how big, So we are just gonna have to keep our ear to the ground and try to be as helpful as we can to you guys understanding it. Helpful. Look forward to seeing you out in Arizona. With a few investors in a couple of weeks. So appreciate all the color. We have to go. Thank you.

Operator: And I will now turn the callback to Bill Boor for closing remarks.

William C. Boor: Yeah. For those who have hung in with us, thanks for hanging in with us. I guess that people are real interested, and hope we are giving you good information to understand not only where we were this quarter, but where we are heading. And it is obviously great to be able to report such strong results amid an environment that has high interest rates and continuing uncertainty in the economy. Going into the winter months, we have talked about this. it is always a challenging point in the year. We know activity will slow with the weather and the holidays.

But what is different this year is we are entering that period with the largest backlog since 2022-2023 when interest rates ran up. So we really feel like we are well positioned to react as needed to the markets. Thanks everyone for joining us and for your interest in Cavco, and we look forward to keeping you updated.

Operator: This concludes today's conference call. Thank you for participating and you may now disconnect.

This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. Parts of this article were created using Large Language Models (LLMs) based on The Motley Fool's insights and investing approach. It has been reviewed by our AI quality control systems. Since LLMs cannot (currently) own stocks, it has no positions in any of the stocks mentioned. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability.

The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.