U.S. Markets closed

Edited Transcript of CVCO earnings conference call or presentation 30-Jul-19 5:00pm GMT

Q1 2020 Cavco Industries Inc Earnings Call

Phoenix Aug 2, 2019 (Thomson StreetEvents) -- Edited Transcript of Cavco Industries Inc earnings conference call or presentation Tuesday, July 30, 2019 at 5:00:00pm GMT

TEXT version of Transcript

================================================================================

Corporate Participants

================================================================================

* Daniel Loren Urness

Cavco Industries, Inc. - Executive VP, CFO & Treasurer

* Joshua J. Barsetti

Cavco Industries, Inc. - CAO

* Mark Fusler

Cavco Industries, Inc. - Director of Financial Reporting

* William C. Boor

Cavco Industries, Inc. - President, CEO & Director

================================================================================

Conference Call Participants

================================================================================

* Daniel Joseph Moore

CJS Securities, Inc. - Director of Research

* Gregory William Palm

Craig-Hallum Capital Group LLC, Research Division - Senior Research Analyst

================================================================================

Presentation

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

Hello, and welcome to Cavco Industries First Quarter Fiscal Year 2020. (Operator Instructions) As a reminder, this conference is being recorded. I would now like to introduce your host for today's call, Mark Fusler. You may begin.

--------------------------------------------------------------------------------

Mark Fusler, Cavco Industries, Inc. - Director of Financial Reporting [2]

--------------------------------------------------------------------------------

Good afternoon, and thank you for joining us for Cavco Industries First Quarter Fiscal Year 2020 Earnings and Conference Call.

During the call, you'll be hearing from Bill Boor, President and Chief Executive Officer; Dan Urness, Executive Vice President and Chief Financial Officer; and Josh Barsetti, Chief Accounting Officer.

Before we begin, we'd like to remind you that the comments made during this conference call by management may contain forward-looking statements under the provisions of the Private Securities Litigation Reform Act of 1995, including statements of expectations or assumptions about Cavco's financial and operational performance, revenues, earnings per share, cash flow or use, cost savings and operational efficiencies. 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.

I encourage you to review Cavco's filings with the Securities and Exchange Commission, including without limitation, the company's most recent Forms 10-K and 10-Q, which identify specific factors that may cause actual results or events to differ materially from those described in the forward-looking statements. Some factors that may affect the company's results include, but are not limited to, the risk of litigation or regulatory action arising from the subpoenas we receive from the SEC; potential reputational damage that could result as -- on these matters under inquiry; adverse industry conditions; our involvement in vertically integrated lines of business, including manufactured housing consumer finance, commercial finance and insurance; market forces and housing demand fluctuations; our business and operations being concentrated in certain geographic regions; loss of any of our executive officers; federal government shutdowns; and extensive regulation affecting manufactured housing. This conference call also contains time-sensitive information that is only accurate as of the date of this broadcast, Tuesday, July 30, 2019. Cavco undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this conference call except as required by law.

Now I'd like to turn the call over to Bill Boor, President and Chief Executive officer. Bill?

--------------------------------------------------------------------------------

William C. Boor, Cavco Industries, Inc. - President, CEO & Director [3]

--------------------------------------------------------------------------------

Thanks, Mark, and welcome everyone. The purpose of the call today is obviously to cover the quarterly results. However, we've had some interesting timing with the acquisition that was just communicated through a press release late yesterday. The acquisition is of Destiny Homes, the one-plant manufacturer in Moultrie, Georgia, and we expect it to close this Friday. We're really excited to welcome the employees to Cavco, and we're very positive about how their products and their independent dealer network fit with our existing plants. Destiny produces a complementary, moderate to high price-point product relative to the existing Cavco plants in that region. And the timing and signing of the definitive documents right here at the earnings release has been coincidental, but it does give us the opportunity to comment here about how the Destiny Homes plant will be a great addition to our system of manufacturing plants. I'd say that if the good work to -- good teamwork on both sides to get to this point in the process is any indication, it's going to work out really well for both sides. And again, we couldn't be happier about the deal.

Let's turn to the quarter, starting with the big picture. We remain in a period of solid demand, and the fundamentals that drive manufactured housing are very encouraging. First, the economy is strong. You can see this by indications such as consumer confidence and employment. Mortgage interest rates remain very attractive, which obviously supports home buying ability. Finally, there's no doubt that long-term demographics are driving household formations and demand for manufactured homes.

We're continually encouraged by the GSE efforts to increase liquidity for both land-home and home-only financing. As expected, these programs will take time to become meaningful in size. But they represent an important recognition of the quality and the value of manufactured homes and the role our industry should been enabled to play in improving access to affordable housing. There's a real need for our industry's products. The affordable housing situation is concerning. Manufactured housing has historically been a big part of the solution in rural areas. With attention being focused by the GSEs, HUD and others, outdated perspectives are changing, and we'll have opportunities to expand manufactured housing's impact.

I want to briefly comment on the regulatory environment. We recognize and very much appreciate the efforts by HUD to modernize policies and processes so they're more cost-effective and efficient. HUD has also been actively shining a light on the manufactured housing industry as a solution. Along with others in the industry, we were able to display a home on the mall in Washington D.C. during HUD's Innovative Housing Showcase in June. It was a really good event, and it gave legislators and others a firsthand understanding of the quality products being produced much more efficiently than by other means. Again, outdated and incorrect mindsets about MH are changing. And as they do, zoning restrictions should ease to appropriately accommodate our products. And that's really about opening up market opportunities that have been closed to date.

Turning to the quarter, I'd summarize it by saying this has been one of stability with continued healthy demand. As we've discussed on previous calls, there have been short-term supply chain dynamics that have made it difficult for folks to get a clear handle on underlying demand. We continue to believe that demand is strong for the reasons already cited. In recent quarters, it's been clear that the market has been concerned about falling backlogs, even though those backlogs have been large compared to what we consider optimal. This quarter, our sequential backlog stabilized at essentially the same overall level as last, approximately 7 weeks. If we could dial in a constant backlog level, we'd pick 3 to 4 weeks. However, there is no such thing as a constant backlog level through time. And we're very happy to know that the orders are there, and we can continue producing to meet the robust customer demand.

By definition, the stable backlog this quarter means we're matching production to demand, which remains strong for our products. The supply chain inventory situation is improving as expected. We view these as near-term fluctuations and expect continued destocking where retail placements and inventories are still correcting. As Dan will discuss, our plants are doing a very good job of managing price and margin given input cost fluctuations and uncertainty. Most importantly, they continue the ongoing work of making sure our products are updated and what the retailers and home buyers are looking for. Because in the end, this is a local business and I really applaud the people around our company that stay focused on the fundamentals, which drive results like those we're proud to report on this quarter.

With that, I'll turn it over to Dan Urness to discuss the financial results.

--------------------------------------------------------------------------------

Daniel Loren Urness, Cavco Industries, Inc. - Executive VP, CFO & Treasurer [4]

--------------------------------------------------------------------------------

Thank you, Bill. Net revenue for the first fiscal quarter of 2020 was $264 million, up 7% compared to $246.4 million during the prior year's first fiscal quarter. To provide a little more clarity, I'll explain this increase by operating segment.

Factory-built housing is our largest segment, and its net revenue increased approximately 7% as well to $249 million from $233 million in the prior year. This is a result of higher home selling prices combined with a more favorable product mix of larger, more amenitized homes. The increase was partially offset by a 2.1% reduction in the number of homes sold given their larger size and added complexity.

Financial services segment net revenue increased 12% and that's from higher home sales volume, more insurance policies in force and increased interest income on commercial loans outstanding compared to the prior year. These increases were modestly offset by declines in interest income from securitized loan portfolios that continue to amortize.

Consolidated gross profit in the first fiscal quarter as a percentage of net revenue was 22.8%, up from 20.9% in the same period last year. Factory-built housing gross profit improved from the effective home pricing strategies while continuing to benefit from generally lower commodity prices, but were partially offset by lower financial services gross margins as a percentage of net revenue. This because there was more Texas storm activity that resulted in higher claims expense at the insurance subsidiary compared to the prior year period.

Selling, general and administrative expenses in the fiscal 2020 first quarter as a percentage of net revenue was 13.4% compared to 11.9% during the same quarter last year. The increase was primarily from $2.1 million in amortization of premiums related to additional director and officer insurance that was purchased last fiscal year as well as $800,000 of expenses related to the SEC inquiry. In addition, the company realized higher incentive compensation costs related to the improved financial results.

The effective income tax rate was 22.2% for the first fiscal quarter compared to 18.4% in the same quarter of the prior year. The lower effective tax rate in the prior year primarily relates to the greater tax benefits from stock option exercises.

Net income for the first quarter of fiscal 2020 was $21.3 million compared to net income of $19.7 million reported in the same quarter of the prior year, an 8% increase. Net income per diluted share this quarter was $2.31 versus $2.12 in last year's first quarter.

Josh Barsetti, our Chief Accounting Officer, will now discuss the June 2019 balance sheet compared to March 30, 2019.

--------------------------------------------------------------------------------

Joshua J. Barsetti, Cavco Industries, Inc. - CAO [5]

--------------------------------------------------------------------------------

Thank you, Dan. The cash balance at the end of the quarter was nearly $200 million, up from $187.4 million 3 months earlier. The increase is mainly from net income, offset by changes in working capital.

Total commercial loans receivable increased from continued expansion and utilization of commercial loan programs offered. Several balance sheet line items were affected by the new lease accounting standard, which was implemented this quarter. This accounting standard requires that all leases are recorded on the balance sheet, including an asset representing the right to use the specified lease item and the liability in the amount of the required payments during the lease term.

The following balance sheet line items were affected. A new operating lease, right-of-use asset in the amount of $12.2 million is now recorded in the operating lease line item in the asset section. The liability section of the balance sheet now includes $3.6 million in accrued liabilities and $9.3 million in operating lease liabilities for the current and noncurrent portions, respectively, of the liabilities resulting from normal operating leases. This standard also affects the current and noncurrent portions of securitized financings and other, which now includes $1.1 million for property leases where the company will obtain the leased assets at the end of the lease term. These liabilities were previously recorded in accrued liabilities.

Lastly, stockholders equity was approximately $550 million as of June 29, 2019, up over $20.7 million from the March 30, 2019 balance.

Bill, that completes the financial report.

--------------------------------------------------------------------------------

William C. Boor, Cavco Industries, Inc. - President, CEO & Director [6]

--------------------------------------------------------------------------------

Thank you, Josh. While there's a lot of attention on the MH side, I do want to emphasize the strong contribution by our financial services segment. Our insurance company delivered positive results again this quarter, as did our mortgage lending business, which saw increased consumer loan sales. Both are very strategic parts of the company, and they've done an outstanding job of being disciplined in their approach to risk of delivering steady growth.

So I'll end that. I think it's time to turn it over for questions.

================================================================================

Questions and Answers

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

(Operator Instructions) Our first question comes from the line of Daniel Moore with CJS Securities.

--------------------------------------------------------------------------------

Daniel Joseph Moore, CJS Securities, Inc. - Director of Research [2]

--------------------------------------------------------------------------------

I wanted start with just the macro, Bill. A lot has been made about HUD-code shipments being down year-to-date. With the weather breaking, comps getting easier, what are your expectations for industry shipments for the back half of the year? And what does that imply for the full year in terms of calendar '19?

--------------------------------------------------------------------------------

William C. Boor, Cavco Industries, Inc. - President, CEO & Director [3]

--------------------------------------------------------------------------------

Yes. The thought of getting in that prediction mode kind of scares me a little bit. But the one reference we have inside the company is looking at our -- what we see through our retail business. And generally, I'd tell you that we continue to see very good traffic and really good conversion rates of the folks coming to our stores. I think our stores do a really good job. So I'm not sure I can generalize too much from what we see there. But when we look year-over-year, the underlying consumer demand that we're all interested in understanding isn't always that easy to get our hands on directly. It just seems to be pretty good year-over-year from what we can see, and I think our sales are showing that, too. So you get these short-term disruptions, but -- and I'll also acknowledge that our retail business is just in certain geographies. But what -- from what we can see, this year's pretty comparable to last year's underlying demand and we're hopeful that will continue. We don't see really anything in the macro picture that suggests that we would expect it to turn down at this point.

--------------------------------------------------------------------------------

Daniel Joseph Moore, CJS Securities, Inc. - Director of Research [4]

--------------------------------------------------------------------------------

Helpful. And then switching gears to gross margins. 23% range for the last 2 quarters, at the highest level in 5 years, with factory-built margins hitting new highs. In year-over-year terms, gross margin's up 200 basis points. How much would you attribute to improved pricing and higher ASPs and efficiency? And how much of it relates to the recent declines in raw materials and input costs? Just trying to get a sense of the sustainability of the margins at these levels.

--------------------------------------------------------------------------------

Daniel Loren Urness, Cavco Industries, Inc. - Executive VP, CFO & Treasurer [5]

--------------------------------------------------------------------------------

Yes. Thanks, Dan. This is Dan. And really a combination of both, it's a function of effective pricing strategies, the factories in their various local markets being able to manage and work through the appropriate products at the appropriate price, but we are getting the benefit of material price declines in the last 2 quarters, prominently. So that's an important part and one that sometimes is difficult to predict. So we're getting that benefit. We're going to continue to monitor and make sure that we're pricing appropriately and accordingly based on market and based on cost, but we certainly wouldn't count on those benefits continuing either -- well, mainly because of price uncertainties. The tariff situation, demand for materials throughout the back half of 2019, they'll all come into play here. But we'll continue to watch it closely and make sure that we're maximizing our margins by both cost and then also efficiency in production.

--------------------------------------------------------------------------------

Daniel Joseph Moore, CJS Securities, Inc. - Director of Research [6]

--------------------------------------------------------------------------------

Great. And last for me, Destiny Industries. How much -- according to stat surveys, it's looks like they're shipping a couple of hundred homes and have grown nicely over the past year or so. Like can you tell us more about purchase price? What type of shipment levels they're at today versus capacity to continue to grow? What the product profile looks like? Any more detail on that would be very helpful.

--------------------------------------------------------------------------------

Daniel Loren Urness, Cavco Industries, Inc. - Executive VP, CFO & Treasurer [7]

--------------------------------------------------------------------------------

I can cover a part of that and just to kind of get that topic started, if you want to cover a couple of things there. But specific to their production, we look at them as a very solid producer. It's a good factory, a good-sized factory that is producing at good capacity utilization rates currently, but there is room for more. They have the opportunity to build more based on the footprint that they have. And we think that there is going to be opportunity in the -- kind of like Bill referred to, with our independent distribution makeup in that area, combined with theirs, there should be some good dual-brand penetration opportunities. They primarily serve Florida, Georgia and surrounding states. And we feel real good about how things marry up there. But they're mainly producing mid- to higher price points, a good fit and a modern facility. We just don't have numbers to break out for you just yet, but they're going to be good accretive contributors to the bottom line as well as good contributors to the unit production of the company going forward, we expect.

--------------------------------------------------------------------------------

William C. Boor, Cavco Industries, Inc. - President, CEO & Director [8]

--------------------------------------------------------------------------------

This might be a little bit repetitive, but sometimes you look at a deal and you know that -- or you believe that you think you can get them up to a higher level of performance, their projects. And this is not that kind of deal. This is a plant that performs very well. The reason we're so excited about it is because it just seems to fit like a hand in glove in our system. Dan's already said this, but their product tends to be mid- to higher price point. That's something that complements us in that region. We think that we might be able to get that plant some distribution with people that we work with. And we might get some distribution from some of the folks they work with. So Dan, I know you're looking for -- you'd like to get a lot numbers. We're not going to be able to disclose a lot on the numbers side. But to give you a character of the transaction, this is buying something that's already a good performer, and we think we can help each other out.

--------------------------------------------------------------------------------

Operator [9]

--------------------------------------------------------------------------------

(Operator Instructions) Our next question comes from line of Greg Palm with Craig-Hallum Capital Group.

--------------------------------------------------------------------------------

Gregory William Palm, Craig-Hallum Capital Group LLC, Research Division - Senior Research Analyst [10]

--------------------------------------------------------------------------------

I guess just kind of following up on some of the macro commentary and the demand environment in general. Can you provide any commentary around order rates by geography? And I'm just kind of curious as it relates to kind of the cadence of orders throughout the quarter. Sort of how do they build, April, May, June? I don't know if there's any qualified commentary you can provide. And maybe what you're seeing so far in July as well would be helpful.

--------------------------------------------------------------------------------

William C. Boor, Cavco Industries, Inc. - President, CEO & Director [11]

--------------------------------------------------------------------------------

I want to make a general comment about it, that we obviously looked at it. I've been personally digging into it just in my early time in the company, at probably a pretty granular level and trying to understand the quarter-to-quarter movements. We've made -- we've focused a little bit of attention on the southeast and Texas and locations like that where backlogs had dropped a bit, without rehashing it all, with what I call the supply chain dynamics that were at play the last several quarters. I think if we keep focusing on those regions and calling them out, we're probably overemphasizing something because the southeast seems to be steadying, and I think that inventory backlog has started to work its way through as we predicted. We thought it would take well into the summer. And here we are, we feel like it's progressed. When we look at it on a granular basis, orders rates are good and backlogs are stabilizing. And I'd say the same across Texas as well. So we've been part of pointing those areas out. But as I'm sitting here today, looking at the information, I think we'd be misleading people to kind of keep pointing them out as problem areas, in my opinion. So order rates, as we've tried to give a feel for, I mean we look at both traffic in our retail environment, and we also look at order rates in our factories to refill that pipeline. And we're feeling good about both, and we feel like things are very stable out there right now.

--------------------------------------------------------------------------------

Daniel Loren Urness, Cavco Industries, Inc. - Executive VP, CFO & Treasurer [12]

--------------------------------------------------------------------------------

And Greg, I would just add, this is Dan. The order rates in our higher price-point products in any region around the country are relatively strong right now. We're seeing that specifically in factories that focus on those higher price-point products. That continues to remain strong and we were getting good demand in the mid- to higher price-point product, and that's been a constant even through the turbulence over the last year.

--------------------------------------------------------------------------------

William C. Boor, Cavco Industries, Inc. - President, CEO & Director [13]

--------------------------------------------------------------------------------

I think that's a great point that Dan's adding there. And it's interesting because all the focus -- and I focus on it as much as anyone, all the focus about affordable housing in this country, it's kind of interesting that the mix is shifting up right now, and if they are places where inventory and order rates are behind relatively, it's in the lower-end product. So that's something we'll be keeping an eye on and might be interesting to watch as we go forward.

--------------------------------------------------------------------------------

Gregory William Palm, Craig-Hallum Capital Group LLC, Research Division - Senior Research Analyst [14]

--------------------------------------------------------------------------------

That's helpful commentary. What about from a geographical standpoint? What are the areas that you're seeing the strongest demand, where maybe backlogs are still stretched out further than what you'd want?

--------------------------------------------------------------------------------

Daniel Loren Urness, Cavco Industries, Inc. - Executive VP, CFO & Treasurer [15]

--------------------------------------------------------------------------------

So we've got factories in, we think, the key geographic markets across the country, with the exception of the northeast. We don't have a strong presence there, so we really maybe couldn't speak to that too much. But generally, the demand in the areas, we're getting a good portion of that. There is areas where we have stronger presence than others. But for instance, if we were to call one out, the southwest, in particular, continues to be strong. Our factories here continue to have good order rates from these higher price points. Florida continues to be very strong and has been. Again, it's an area where we sell a mix of products but the higher price points included. So really don't have too much to add to what we've maybe already said but just reiterate some of the points.

--------------------------------------------------------------------------------

William C. Boor, Cavco Industries, Inc. - President, CEO & Director [16]

--------------------------------------------------------------------------------

And then southwest still has pretty high backlogs relative to the rest of what we see in the country. And I think we'd say both Florida and the southwest, a portion of why that is, is because the community business is so strong. So if we diced it that way as well and looked at community business versus retail stores, we're noticing that in the areas that the community business is really driving, we've got pretty long backlogs.

--------------------------------------------------------------------------------

Gregory William Palm, Craig-Hallum Capital Group LLC, Research Division - Senior Research Analyst [17]

--------------------------------------------------------------------------------

Yes. Makes sense. It kind of dovetails into my next question. Curious sort of how much focus you're putting in on -- you made an acquisition, but emphasis on putting on sort of increasing efficiencies and throughput at the existing plants. So I mean basically producing more units on the existing footprint rather than greenfield in or additional M&A. So is that a bigger focus area for you given labor and everything out there that seems to be a challenge industry-wide?

--------------------------------------------------------------------------------

William C. Boor, Cavco Industries, Inc. - President, CEO & Director [18]

--------------------------------------------------------------------------------

Yes. Absolutely. I mean we're working internally. I just had a meeting with our manufacturing guys last week, kind of the leaders of that organization, and we're very much rolling up our sleeves. Not that it wasn't being done before, I think it's been an ongoing focus. But we think there is opportunity to continue to push ourselves, improve our existing framework. And I'm really encouraged by the discussions I've been part of since I joined the company on that. So no taking the eye off the ball. I mean we got to be good operators first and foremost, and that's a big emphasis here.

--------------------------------------------------------------------------------

Daniel Loren Urness, Cavco Industries, Inc. - Executive VP, CFO & Treasurer [19]

--------------------------------------------------------------------------------

And we have the capacity to do it.

--------------------------------------------------------------------------------

William C. Boor, Cavco Industries, Inc. - President, CEO & Director [20]

--------------------------------------------------------------------------------

Yes. We've got opportunities, I mean there is no doubt. We're -- I think -- I'll speak for myself. I'm proud of the way these guys perform and the good operations that our people are running. But I think we all agree inside the company that we can even do better, so that's what we're focused on.

--------------------------------------------------------------------------------

Gregory William Palm, Craig-Hallum Capital Group LLC, Research Division - Senior Research Analyst [21]

--------------------------------------------------------------------------------

And Bill, now that you've had some more time at running the day-to-day operations, just kind of curious what you view as some of the biggest opportunities for the company, both in the near and long term.

--------------------------------------------------------------------------------

William C. Boor, Cavco Industries, Inc. - President, CEO & Director [22]

--------------------------------------------------------------------------------

Yes. There's going to be some consistency in this answer. You've seen a couple of them even this quarter. I mean acquisitions are of interest to us. We've been able to put one over the finish line that I've already said we're very excited about, and we'll continue to look at doing that to strengthen our system. You've asked the question about kind of opportunities within our system to continue to push forward and do better. I think we can become more efficient. The labor challenges remain, and I think trying to work on retention, which is a complicated discussion, it would take more time than we have, is critical and also trying to be as efficient as we can in our plants. And that's -- you can't say you're in affordable housing and then not be very efficient at what we do. So those are all priorities. I've talked in the past about we're going to continue -- I don't have a lot of answers on this yet, but we're going to continue looking at the lending business to see what opportunities we have there as well, particularly in the home-only side. And we may increase the use of our balance sheet in that area. Haven't resolved on anything yet, but I think that could be a strategic opportunity for us. So those are kind of the things that are top of mind at this point.

--------------------------------------------------------------------------------

Gregory William Palm, Craig-Hallum Capital Group LLC, Research Division - Senior Research Analyst [23]

--------------------------------------------------------------------------------

Great. Last one. Should we expect anything new, any update on the SEC investigation when the Q comes out?

--------------------------------------------------------------------------------

William C. Boor, Cavco Industries, Inc. - President, CEO & Director [24]

--------------------------------------------------------------------------------

I don't think there will be -- I don't expect any when the Q comes out. We will be first ones to let everyone know when there is an update there, but right now we're just going to continue doing what we said we'd do, which is focus on supporting the SEC's work. So yes, nothing really new to report there.

--------------------------------------------------------------------------------

Gregory William Palm, Craig-Hallum Capital Group LLC, Research Division - Senior Research Analyst [25]

--------------------------------------------------------------------------------

Fair enough. Really nice results here. Good luck going forward.

--------------------------------------------------------------------------------

Operator [26]

--------------------------------------------------------------------------------

We have a follow-up question from Daniel Moore of CJS Securities.

--------------------------------------------------------------------------------

Daniel Joseph Moore, CJS Securities, Inc. - Director of Research [27]

--------------------------------------------------------------------------------

Yes. Just dovetailing on that. I think you called out $800,000 of expense related to the SEC's investigation this quarter. What would be the expectation for fiscal Q2 and beyond at this stage?

--------------------------------------------------------------------------------

Daniel Loren Urness, Cavco Industries, Inc. - Executive VP, CFO & Treasurer [28]

--------------------------------------------------------------------------------

Well, we don't have a number to put out there. It's still ongoing, as Bill mentioned. So we'll have some continued expense. But as we work through it, we're getting through some things that were hurdles initially, but there is ongoing expense. I guess I'm not sure exactly how to characterize it other than that. We'll continue to report the number as long as it's meaningful.

--------------------------------------------------------------------------------

Daniel Joseph Moore, CJS Securities, Inc. - Director of Research [29]

--------------------------------------------------------------------------------

Got it. And then lastly, it's been over a year since FEMA has taken any shipments. Given the ongoing weather-related volatility across a lot of the regions the last 12 months, any sense of where they are in terms of inventory levels and when the agency might start ordering again?

--------------------------------------------------------------------------------

William C. Boor, Cavco Industries, Inc. - President, CEO & Director [30]

--------------------------------------------------------------------------------

I don't have any sense. I'm looking around the room here. Yes, I don't have really anything to tell you on that, Dan. I don't know if Dan Urness, whether you...

--------------------------------------------------------------------------------

Daniel Loren Urness, Cavco Industries, Inc. - Executive VP, CFO & Treasurer [31]

--------------------------------------------------------------------------------

Yes. We don't have a lot of insight on that certainly as it relates to any kind of pending orders or things like that. We -- the inventories are -- levels are little tough to track. It depends how you look at things. But I know that they have been active in assessing options and opportunities in the MH world, and we've been part of some discussions there and trying to help where we can so that they're aware of our resources, what we can do and what we may bring to the table. We certainly would like to help out if any needs occur, but we have to look at those on a case-by-case basis. There is no reason to think that there won't be any potential opportunity in the future to help for natural disaster relief, but no real current information to provide at this time.

--------------------------------------------------------------------------------

Daniel Joseph Moore, CJS Securities, Inc. - Director of Research [32]

--------------------------------------------------------------------------------

Understood. Nice results in the quarter.

--------------------------------------------------------------------------------

Operator [33]

--------------------------------------------------------------------------------

At this time, I'm showing no further questions. I will now like to turn the call back over to Bill Boor, President and Chief Executive Officer, for closing remarks.

--------------------------------------------------------------------------------

William C. Boor, Cavco Industries, Inc. - President, CEO & Director [34]

--------------------------------------------------------------------------------

Okay. Not a lot to close here with. We feel good about things and we appreciate the ongoing dialogue with you all. So let us know if there are additional questions, and thanks for being on the call today.

--------------------------------------------------------------------------------

Operator [35]

--------------------------------------------------------------------------------

Ladies and gentlemen, that concludes today's call. Thank you for participating. You may now disconnect. Everyone, have a wonderful day.