Cavco Industries, Inc. (NASDAQ:CVCO) Q1 2021 Earnings Conference Call - Final Transcript

Jul 31, 2020 • 01:00 pm ET

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Cavco Industries, Inc. (NASDAQ:CVCO) Q1 2021 Earnings Conference Call - Final Transcript

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Q & A
Operator
Operator

All right. [Operator Instructions] Our first question comes from the line of Daniel Moore with CJS Securities. Your line is open. Please go ahead.

Analyst
Daniel Moore

Bill, Dan, good afternoon, I guess I should say, good morning. Thanks for taking the questions.

Executive
William C. Boor

Yeah. Thank you.

Executive
Daniel L. Urness

To start with, I guess, capacity utilization, we talk a lot about it. I'm just wondering, given current labor constraints kind of how meaningful that number is. That's kind of a philosophical question but more specifically, over the next, let's say, six months, you seem to be running close to full out, how -- what is your actual capacity and how close are we running to that as we exited the quarter or entered the second quarter?

Executive
William C. Boor

Yeah. I mean the -- we got to go back and forth a little bit to make sure we're addressing your question about the philosophical aspect. But we typically, for many quarters, have been running 80% plus or minus a little bit. And we've been talking about labor being really the governor on that. And so when we convey that we finished this past quarter at 70% that's just kind of expressing it that we're that much more constrained by labor. So, we're running about, what, 90% as many units as we were before the COVID issues kind of hit us with absenteeism and plant shutdowns. So, maybe the -- maybe using capacity utilization, I don't know if that's the way that resonates the best with you, but we're kind of trying to indicate that we're about 90% of what our pre-COVID level of productivity is. And, of course, we're making everything we can in an environment where there are very strong orders.

Analyst
Daniel Moore

Indeed. I guess my question is how much additional capacity do you think you'll be able to add? How quickly can we get back to those prior growth rates, prior production rates? And can we add additional capacity beyond that, given the current order rates and current demand environment?

Executive
William C. Boor

Yeah, we're always investing and looking for investment opportunities in our system from a physical capacity perspective. And we're working on some projects in given [Phonetic] plants in that regard. And I hate to sound like a broken record, but the question about how quickly we can recover it, we feel it's really a question about getting job applicants and building the strength of our teams, which has really taken a step backwards over the last couple of months. So it's kind of hard to predict that. I don't want to belabor the issue because we're trying to do everything that we can.

It's just blocking and tackling in our plants to be as productive as possible and to hire, but we have had trouble getting good applicants which I -- which we're actually hopeful is a function of the $600 a week subsidy that the federal government has given to unemployment. I'm not trying to point and blame too much on that, but it's a reality that that's