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Cavco Industries Inc (CVCO) Q3 2021 Earnings Call Transcript

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CVCO earnings call for the period ending December 26, 2020.

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Cavco Industries Inc (CVCO 0.70%)
Q3 2021 Earnings Call
Jan 29, 2021, 1:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, thank you for standing by and welcome to the Third Quarter Fiscal Year 2021 Cavco Industries, Inc. Earnings Conference Call and Webcast. [Operator Instructions] I would now like to introduce your host for today's program, Mark Fusler, Director of Financial Reporting and Investor Relations. Please go ahead, sir.

Mark Fusler -- Director of Financial Reporting and Investor Relations

Good day and thank you for joining us for Cavco Industries' third quarter fiscal year 2021 earnings conference call. During the call, you'll be hearing from Bill Boor, President and Chief Executive Officer; Paul Bigbee, Chief Accounting Officer; and myself.

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, 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. 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 impact of local or national emergencies, including the COVID-19 pandemic and such impacts from state and federal regulatory action that restricts our ability to operate business, and the impacts on customer demand and the availability of financing for our products; our supply chain and the availability of raw materials for the manufacture of our products; the availability of labor and the health and safety of our workforce; our liability and access to capital markets; the risk of litigation or regulatory action; potential reputational damage that Cavco may suffer as a result of 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; additional federal government shutdowns; and regulations affecting manufactured housing.

This conference call also contains time-sensitive information that is only accurate as of the date of this live broadcast, Friday, January 29, 2021. Cavco undertakes no obligation to revise or update any forward-looking statements, whether written or oral, to reflect events or circumstances after the date of this conference call, except as required by law.

I would like to turn the call over to Bill Boor, President and Chief Executive Officer. Bill?

William C. Boor -- President and Chief Executive Officer

Welcome and thank you for joining us today to review our results for the third quarter. I want to start today by saying that we've made good progress, pushing our production level up toward pre-COVID levels and our intention is to keep pushing beyond those levels. We increased capacity utilization to 75% for the quarter, up from 65% in Q2. This is despite a resurgence in COVID that is directly driving absenteeism in the plants and despite continuing supply challenges that are as serious today as they have been over the past year. These gains were the result of our plants staying focused, working hard to hire, retain and build skills, and managing the supply disruptions very well.

As indicated, we intend to keep pushing beyond pre-COVID utilization levels. We need to in order to address the extremely high backlogs which continued to build during the quarter. This backlog now stand at $472 million, up 47% from last quarter. Based on the current production levels, that equates to approximately 26 weeks to 28 weeks. This is a continuing story of exceedingly high demand. We estimate that production challenges have added about three weeks to that backlog, or said another way, if we had no production disruptions over the last three quarters, orders are such that the backlog would still be more than 23 weeks. Last quarter we reported that order rates were up 65% year-over-year. That continued through the third quarter, up 65%.

It's widely understood that the cost of supplies have gone up considerably. After a brief drop in the October and November timeframe, lumber and OSB have shot up again. On lumber, the SPF, Spruce-Pine-Fir, indicator price ended the quarter up 150% from April and OSB was up 200% over that timeframe. Our plants have done an outstanding job of keeping up with these cost increases with higher average selling prices. This is a disruptive and difficult process for the plants, dealers and ultimate homebuyers. And the process continues with more price increases going into effect during the fourth quarter.

On a percent basis, gross margin typically gets squeezed during periods of rapid cost escalation and that's what we've seen in the third quarter. Our intention is to maintain our overall dollar profitability in an environment of very volatile input costs that isn't limited to materials but also includes labor. And as I said, so far, we've been able to keep up.

Our retail operations are performing very well. One of the advantages of having Palm Harbor Villages as part of Cavco is that we understand first hand the impact of price increases and long lead times. Our owned retail operation is subjected to the same dynamics as our independent dealers. They have more opportunities than houses to sell. From day one in the pandemic, the retail operations shifted gears and they've done a really good job of generating leads and supporting homebuyers through phone ups and e-leads. And the story is much the same as last quarter, continuing strong demand. We've seen traffic and sales follow a seasonal pattern with slowing over the holidays, but that pattern has been at a significantly higher level year-over-year.

We also had a very strong quarter in financial services. Generally, financing is available to qualified buyers and rates have stayed very low through the quarter. As a result, both mortgage and home-only originations are strong. And on the insurance side, policy counts are up. Unlike last quarter, when the number of storms was unusually high, this quarter claims were seasonally low. So, very strong results in that regard.

I want to avoid stealing all the financial headlines from Paul and Mark, but I will say that we continue to generate a significant amount of cash. We believe we have good prospects for investing in growth both organically and through acquisitions. I will pre-empt the question regarding the share repurchase authorization from the Board, which occurred in mid-quarter by reporting that we did not execute any repurchases before the earnings window closed. As we said when the authorization was announced, this is an important tool for us to manage our balance sheet. And to the extent we repurchase shares over time, we don't expect that to limit our ability to strategically invest in the business.

Again, we feel it was a good quarter when all of our operations did a very good job of managing through disruption and uncertainty. Progress [Phonetic] increasing throughput has been encouraging and that continues to be our focus.

With that, I'll turn it over to Paul to discuss the financial results in more detail.

Paul Bigbee -- Chief Accounting Officer

Thanks, Bill, and good afternoon, everyone. So I'm going to go through the results of operations for the third quarter of fiscal 2021 and then I'll turn it over to Mark to go through the balance sheet.

Net revenue for the third quarter of 2021 was $288.8 million, up 5.5% compared to $273.7 million during the prior year's third quarter. As you would expect, most of this was within the factory-built housing segment where net revenue increased 5.3% to $270.8 million from $257.1 million in the prior year quarter. Increase was due to a 13% increase in average revenue per home sold, primarily from product pricing increases to pass along changes in material costs and a product mix that shifted slightly more toward double white homes. Pricing increases were partially offset by 6.8% decrease in units sold. And again, we had home production challenges around high factory employee absenteeism, hiring and building material supply shortages.

In the financial services segment, net revenue increased 8.4% to $18 million from $16.6 million, mainly as a result of higher home loan sales volume and more insurance policies in force compared to the prior year. Additionally, the third quarter included $1 million more unrealized gain on equity investments in the insurance subsidiary's portfolio while the prior-year period had $300,000 in unrealized gains. These increases were partially offset by declines in interest income from the formally securitized loan portfolios that continue to amortize as expected.

Consolidated gross profit in the third quarter as a percentage of net revenue was 20.5%, down from 21.9% in the same period last year. The decline is mainly the result of factory built housing segment decreasing to 17.4% in the third quarter 2021 versus 19% in the prior year quarter, where the higher material costs impacted the margin percent. Each factory has been implementing product price increases at a rate that is covering input cost increases. However, gross margin percentages have not yet been maintained. Lower factory built housing gross margins were partially offset by improved gross margins in financial services, which is aided by lower weather-related claims and higher unrealized gains on marketable equity securities.

SG&A expenses in the fiscal ' 21 third quarter as a percentage of net revenue was 12.3% compared to 13.5% during the same quarter last year. The decrease was primarily from the D&O insurance premium becoming fully amortized with no expense in the current quarter compared to $2.1 million in the prior year period. Additionally, during the quarter, the Company received $400,000 insurance recovery of prior legal expenses related to the SEC inquiry, resulting in a net expense of $300,000 compared to last year quarter's $900,000 cost. These positive year-over-year comparisons were partially offset by higher corporate-related charges.

Other income, net, this quarter was flat at $2.2 million. The current quarter did include unrealized gains of $800,000 on corporate equity investments higher than $300,000 in the prior year quarter. This increase was offset by reductions in interest income earned on cash and commercial loan receivables given lower interest rates.

Pre-tax profit was up 4.9% this quarter to $25.9 million from $24.7 million for the prior year period. The effective income tax rate was 23.9% for the third fiscal quarter compared to 15.5% in the same period last year. The lower effective tax rate in the prior year was primarily the result of $1.7 million in tax credits from the 2020 Appropriations Bill. The 2021 Consolidated Appropriations Act was signed into law in December 27, 2020, the day after our quarter closed, and therefore, this will be reflected in the fourth fiscal quarter.

Net income was down 5.7% to $19.7 million compared to net income of $20.9 million in the same quarter of the prior year. Net income per diluted share this quarter was $2.12 versus $2.25 in last year's third quarter.

Now, I'll turn it over to Mark to talk about changes in the balance sheet.

Mark Fusler -- Director of Financial Reporting and Investor Relations

Thanks, Paul. So comparing the December 26, 2020 balance sheet to March 28, 2020. The cash balance was $327.5 million, up from $241.8 million nine months earlier. Increase was primarily due to five items. It includes: number one, net income net of non-cash items; two, changes in working capital, including greater accrued expenses and other current liabilities balances which includes higher customer deposits received as a result of higher order rates and longer lead times; three, lower net commercial lending activity; four, principal collection on consumer loans, which are all partially offset by purchases of property, plant and equipment.

The current portion of consumer loans increased from a greater number of loans classified as held for sale due to the timing of the loan sale. Investments increased from the recovery of underlying equity markets during the period. Prepaid and other assets was higher from the assets recorded in regards to the loan repurchase option for delinquent loans that have been sold to Ginnie Mae. While we are not obligated to repurchase these loans, accounting guidance requires us to record an asset and liability for the potential of a repurchase. And that balance increased from additional loans and forbearance.

Long-term consumer loans receivables decreased from principal collection on loans held for investment that were previously securitized. Operating lease right-of-use assets and related liabilities increased from a five-year renewal of the lease of one of our manufacturing facilities. Accrued expenses and other current liabilities increased from higher customer deposits, which have grown with factory backlogs as well as delinquent loan repurchase option discussed above. Lastly, stockholders' equity was approximately $661.7 million as of December 26, 2020, up $54.1 million from $607.6 million as of March 28, 2020.

Bill, that completes the financial report.

William C. Boor -- President and Chief Executive Officer

Thanks, Mark. Jonathan, let's turn it over for questions.

Questions and Answers:

Operator

[Operator Instructions] Our first question comes from the line of Daniel Moore from CJS Securities. Your question please.

Daniel Moore -- CJS Securities -- Analyst

Good afternoon, or perhaps good morning. Thanks for taking the questions, Bill.

William C. Boor -- President and Chief Executive Officer

Hi, Dan.

Daniel Moore -- CJS Securities -- Analyst

Maybe to start with, in the past when we've seen backlogs rises quickly, dealers have tried to kind of jump in line to make sure they get orders. Are you seeing any evidence of that? Just your confidence for -- that helped the buyers behind the -- that there are indeed all the buyers behind the incremental orders. And second, with backlog stretching out close to six months, any risk or concern of losing some of those orders?

William C. Boor -- President and Chief Executive Officer

Yeah. It stands to reason we have seen in the past. So, it's logical to think that there could be some of that and we're going to keep our eyes on that over time. We can do things that hope to kind of validate orders, as far as checking if there is an actual retail, or a homebuyer behind a retail sold order. So, we're going to keep our eye in that regard. But I tell you, I guess, generally that our feeling right now is that there is not a meaningful amount of that going on.

And with -- your other question, I think, was backlogs this long result in and people kind of -- and losing orders basically, if I understood it right. And I don't think we're seeing a lot of that and there's two points to be made there. One, if someone who is looking to buying a home from Cavco and is frustrated with the long lead time, which we would certainly understand, I don't think they have places to go, unfortunately, to get a shorter lead time. We've kind of got a sense that are pretty much area-by-area our competitors are facing similar long backlogs.

And the other is that I really think it can't be lost on anyone that, well, I think this demand is very real. We've talked about it in the past that it's the result of long period of under building for general housing. The low interest rates are certainly a catalyst allowing that pent-up demand to come forward. So, I don't think people are just deciding out of frustration to any great degree or deciding out of frustration over backlogs that they just won't buy now because it takes too long. I think they're interested in trying to get those interest rates. So, those are risk that you identify and that we'll keep our eye on, but from our perspective this demand is very real.

Daniel Moore -- CJS Securities -- Analyst

That's very helpful. Excellent. With -- switching to the margin profile. With price increases that you put through, I guess, when you look at the factory-built housing side of the business, how long do you expect to take your gross margins back to that more normal kind of 19%, 20% level? Does that [Phonetic] get closer to this quarter, or, I mean, you're still chasing price increases? Any color there would be helpful.

William C. Boor -- President and Chief Executive Officer

Yeah. I mean, price increases are still occurring in the industry into the New Year. Your question about how long until the percent gets back, you do have to -- and I'm sure people are, you do have to kind of keep aware of the fact that you can cover a cost increase and the percent will still drop is costs are going up this fast and prices are going up this fast. We told people in the past that this has been an unusual period of price increases because the industry, and us included, we really haven't protected orders in the backlog. And I think this quarter was a great example of that because we achieved a pretty considerable increase in average selling price. So, as far as how long until we recover to higher percent margins, the quickest way would be a cost drop. And I'm not sure I'm in a position to predict that.

Daniel Moore -- CJS Securities -- Analyst

Understood. And maybe just in terms of capacity. What steps are you taking on the labor side aside from just, obviously, raising wage to attract more labor and unlock capacity? And you mentioned your -- progress you have, increasing throughput was encouraging. Can you elaborate or quantify that at all?

William C. Boor -- President and Chief Executive Officer

Yeah. It's a lot of things, so it's hard to just point out one thing and say that what's doing it. And I really -- as I probably already have made the point, I really want to complement our folks out there that are working every day to make every house they can make. The wage work that we're doing, we do that on a local basis. But making sure our wages are appropriate, that's certainly for hiring, it's also for retention. And when we retain our people, the skills on our teams go up and that makes a big difference to throughput. So, kind of stating a little bit of the obvious, but that's the kind of work that I think is going on and I think we're having some success with.

Hiring is still a challenge. I think I can say that across the board. We're understaffed even as we've been able to increase productivity. So, we're doing some things that are kind of near-term immediate impact stuff. I think, most notably wages. And we're also looking at this as a long-term dynamic. So, we're not just addressing a month-to-month labor challenge. We're doing things like putting in place some pretty significant training programs that we think are already starting to impact retention. And it's a lot of stuff. I wish I could just point out one thing, but I think the things that we're looking at are really starting to -- well, they're going to position us better as far as labor going forward.

Paul Bigbee -- Chief Accounting Officer

One thing I would add to that is wage incentives. So, we have incentives at several of the plants where people get a bonus if they stay a week, and it's a significant bonus. So just to get that retention per week and then add a month, you get a little bit of a higher bonus. So -- and the incentives have been helpful as well.

William C. Boor -- President and Chief Executive Officer

It's a great point. So, we've definitely put in some of those kind of attendance and retention bonuses that I think have been meaningful.

Daniel Moore -- CJS Securities -- Analyst

Very helpful. I'll sneak one more in, and then jump back in queue. But in terms of the ASPs, the 13% jump, is it predominantly just pass-through of raw materials, or was there's some mix shift as well?

William C. Boor -- President and Chief Executive Officer

It's primarily from the increase in the home sold price. The product mix shift to more double wides was a smaller portion of that add, most of that was the price per unit.

Daniel Moore -- CJS Securities -- Analyst

Got it. Okay. I'll jump back with any follow-ups. Thank you.

William C. Boor -- President and Chief Executive Officer

Thanks, Dan.

Operator

Thank you. Our next question comes from the line of Greg Palm from Craig-Hallum Capital. Your question please.

Greg Palm -- Craig-Hallum Capital -- Analyst

Great, thanks. I guess, just starting off with demand. I'm curious, any significant difference in demand levels by geography? And then what about channel? I mean, I assume the strength is sort of across the board, but is it skewed more toward retail than community? A little bit more color would be helpful.

William C. Boor -- President and Chief Executive Officer

Yeah. Geographically, this is going to be a continuing theme from discussions we had in the past. If there was one area that was -- I got to figure out my adjectives well here. If there's one area that was less extraordinarily strong for this experience through the last several quarters, it was kind of Florida, and it was a little bit more communities. But what I'll report on that is we are seeing that trending up. So, we're seeing community business kind of get back to trending toward levels that we would have expected. The rest of the country from our perspective has just been pretty strong overall. It's hard to really differentiate and there certainly is an area, including Florida, that we'd call weak.

And then you're also asking about channel. Again, the community business for the last couple of years was growing more rapidly than street dealer business. And when the pandemic started, that kind of shifted pretty abruptly when some of the community operators kind of just took a pause on orders. You'll remember that they didn't cancel orders, but they held them. And that kind of shifted things. And a lot of the strength -- I'd say, the majority of the strength we've seen over the last three quarters has really been back to the street dealer type retail business.

So, that's been kind of the observation from a channel perspective but the communities are coming back. I think last quarter we reported that in the Southwest, where we do a lot of community business, we considered it to be back to normal.

Greg Palm -- Craig-Hallum Capital -- Analyst

Yeah, that makes sense. I know you don't typically provide guidance, but just trying to get a little bit a more color around your expectation in how that backlog gets converted to revenue, both kind of in the near-term and then looking ahead? I mean, at what point -- and some of this obviously hinges on, the pandemic and scarcity of labor and whatnot. But what's your own sense of how that sort of will progress over the next year?

William C. Boor -- President and Chief Executive Officer

Yeah. We're not seeing any weakness and any indicators of weakness in demand. And I kind of feel like a little bit of a broken record, because I was talking about this before the pandemic started that I really believe that there is a huge amount of pent-up demand waiting for the opportunity to buy houses. And so, I don't think this is a short-term phenomenon in my opinion.

As far as how it gets met, I don't know how long demand will be six -- or orders will be 65% up year-over-year, we're now two quarters at that level. We haven't seen it subside. But we're going to get as much. Our answer has -- it's pretty obvious, we're going to get as much out of the plants we have and frankly, when we get into this kind of a situation, you have to consider where additional capacity can come from. So, all of that's -- all of those are considerations that we're pretty active with right now.

Greg Palm -- Craig-Hallum Capital -- Analyst

Would you be disappointed if you didn't see volumes or production rates continue to increase at a gradual pace throughout calendar '21?

William C. Boor -- President and Chief Executive Officer

It's going to be directly related to what kind of challenges we have. So, I guess I'm kind of in very close conversation with our operating leaders and we're watching that ebb and flow every week basically about the tendency [Phonetic] in our facilities, the ability to hire and supply. We're very concerned about supply right now. I think as I said in my comments, that's as much of an issue today as it has been through this entire experience and maybe more. So, disappointment.

I think we're managing some moving dynamic situations. But yeah, our intent is to just get better and better at this. It was an interesting quarter for that. I mean, I'll give you kind of my observation. One of my takeaways is, this past quarter wasn't any easier than the previous two from an absentee and supply perspective and yet our plants have gotten significantly better at getting homes built. So, I'm pretty proud of that. And I think we'll be able to continue doing that. But if we have supply disruptions that even could potentially shut our plants down, I'll be disappointed in that but I won't be disappointed in our ability to operate.

Greg Palm -- Craig-Hallum Capital -- Analyst

Yeah. And I probably should have started with a congratulations to you and the team because, yeah, given all the puts and takes out there, the execution was really good. Last one...

William C. Boor -- President and Chief Executive Officer

Thank you, Greg.

Greg Palm -- Craig-Hallum Capital -- Analyst

For me as it relates to just kind of margins. I'm thinking ahead. And we're all assuming or thinking at some point commodity costs will normalize, who knows when. But if that's the case, and you're able to hold current pricing where it is assuming that demand is still strong, I mean, what happens to margins in that scenario? If you run the math, I mean, I'm assuming somewhere above pre-COVID levels if ASPs are 15% or 20% higher, but would love to kind of get your high level thoughts.

William C. Boor -- President and Chief Executive Officer

Yeah. I mean, I think we all kind of have observed this through time, right, that you get the compression when costs are going up and then after selling price kicks in, which we're seeing happen pretty quickly, the reaction time on that's been pretty quick. Then if cost subside, you got a period with higher percent margins and so, this has been a pretty -- I don't know if it's a right word, but pretty violent increase in costs that we've seen. I mean, it's been dramatic growth in magnitude and speed, and we've been able to pretty much follow that with pricing. So, if cost subside, I mean, we will see some pretty significantly high gross margin percentages for a period of time and we've got long backlogs. So, they are just a supply and demand element of the pricing side.

Greg Palm -- Craig-Hallum Capital -- Analyst

Yeah, makes sense. Okay. All right, I'll leave it there. Best of luck going forward. Thanks.

William C. Boor -- President and Chief Executive Officer

Thanks, Greg.

Operator

Thank you. Our next question comes from the line of Jay McCanless from Wedbush. Your question please.

Jay McCanless -- Wedbush -- Analyst

Hey, good morning, everyone. Thanks for taking my questions.

William C. Boor -- President and Chief Executive Officer

Hi, Jay.

Jay McCanless -- Wedbush -- Analyst

Hey. So, with the new administration, I know we've seen press reports about potential first-time homebuyer tax credits and some other things designed to help housing. Are you guys hearing that manufactured housing might be included in any of those credits and then other -- any other highlights either from a regulatory or from a demand standpoint that you heard or seen from this new administration that we should be watching?

William C. Boor -- President and Chief Executive Officer

Yeah. I'm not even sure. I'm as well up to speed as I should be on a lot of it to be blatantly honest. But I do think that generally we expect continuing support of the manufactured housing industry. Isn't really on point to your question, but I think it's related to the industry or the administration change. We've had a really good four years with HUD and kind of being smart about regulation as far as appropriate regulation, but not too much bureaucracy that doesn't add value and we've really made some headway with them as an industry. And I don't see any reason why that would -- that we would be concerned about that necessarily.

So -- and I'd say this too, I mean, anything that kind of programs that they're considering as far as helping homebuyers, don't get me wrong, we're all for that. Right now, the problem is supply. So, trying to do things for manufactured housing like get local municipalities to recognize it zoning that keeps manufactured housing out, that would be helpful, doing things that help us and get our [Phonetic] products out there would be the kind of things that really is going to make a difference in us meeting a need that we're seeing.

Jay McCanless -- Wedbush -- Analyst

Yeah, absolutely. And then on the lending side, could you just talk about where chattel rates have moved during the quarter? And are you still seeing really good availability on that front for chattel customers?

William C. Boor -- President and Chief Executive Officer

Yeah. As I said, I mean if someone's qualified, they are not having any problem getting a loan right now. And as far as kind of what's going on with the chattel market, I'd just say generally, we talked last quarter, I believe, that chattel rates dropped from their kind of stable historical level of 7.5% to 8% and they dropped down into the 5%, 5.5% range, and it's kind of been there, it's still down at those levels. So, right now we see chattel lending as pretty supportive of the demand that we're seeing.

Jay McCanless -- Wedbush -- Analyst

Okay. That's great. And then any update on the SEC investigations?

William C. Boor -- President and Chief Executive Officer

Not other than what we've already disclosed. I think, I will acknowledge this is the first call since we had the -- since we reported and disclosed that we had a Wells Notice from the SEC on the Company. And that was kind of in the latter part of November. But similar to previous discussions, I view that as a step in the process. It's not something I won't ever pretend like it's something that we wanted. But, I also feel like it's a step forward from a process perspective. So -- and that Wells Notice is -- just to remind everyone, that's basically it means that the staff at the SEC is considering a recommendation to the commission of an enforcement action. So, we got to just keep running the process out with them, we got to keep supporting their process and hope for a resolution, but I really can't speculate on when or what that might be.

Jay McCanless -- Wedbush -- Analyst

Understood. Thanks for taking my questions.

William C. Boor -- President and Chief Executive Officer

Thanks, Jay.

Operator

Thank you. This does conclude the question-and-answer session of today's program. I'd now like to hand the program back to Bill Boor, President and CEO, for any further remarks.

William C. Boor -- President and Chief Executive Officer

Yeah. Thank you. I guess, just to wrap it up, and we've kind of been beating this pretty hard, but demand is really beyond any expectation we had nine or 10 months ago. We're -- I think we're doing a good job of operating through some very real challenges and risks. And people that make up our Company have stayed very focused on making a difference for our homebuyers. We do that with the homes we build, but also the loans and insurance we provide. So, I'm pretty proud of all that. And at the beginning of the pandemic, we rallied around that intention. And I believe it's really showing in our progress and strong results.

So, with that, I really want to thank everyone for your interest in Cavco and I hope that each of you and your families are staying healthy and safe. Thanks everyone.

Operator

[Operator Closing Remarks]

Duration: 34 minutes

Call participants:

Mark Fusler -- Director of Financial Reporting and Investor Relations

William C. Boor -- President and Chief Executive Officer

Paul Bigbee -- Chief Accounting Officer

Daniel Moore -- CJS Securities -- Analyst

Greg Palm -- Craig-Hallum Capital -- Analyst

Jay McCanless -- Wedbush -- Analyst

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