Cavco Industries, Inc. (NASDAQ:CVCO) Q2 2021 Earnings Conference Call - Final Transcript

Oct 30, 2020 • 01:00 pm ET

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Cavco Industries, Inc. (NASDAQ:CVCO) Q2 2021 Earnings Conference Call - Final Transcript

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Q & A
Operator
Operator

[Operator Instructions] Our first question comes from Daniel Moore with CJS Securities. Your line is now open.

Analyst
Daniel Moore

Good afternoon, gentlemen. Thank you for taking the questions. Maybe starting with just capacity utilization, you said 65%, I believe during the quarter, up to 75% -- it's up to 70% by the end. How quickly can you ramp that up to 75% and ultimately closer to 80%? And what kind of key challenges to doing so?

Executive
William C. Boor

Yeah, the speed I mean that's what we're all focused on, I can tell you that, the speed is partly going to be dependent on how things continue. I mean, just to give you a feel, kind of given plan, we might be going along pretty well with low absenteeism. And then if that area, sees an upsurge in, for example COVID cases, suddenly our absenteeism spikes and it hurts our utilization. So, as you guys know we're not as COVID and we're seeing kind of sort of a moving target on where those cases surge, that's just one example. The other thing that we don't control and it's hard to have a crystal ball on its supply, which is really affecting us.

So, Dan, it's hard to say how quickly if it, all that stuff suddenly smooth out, I think we would move up pretty quickly to 80%. We've been able to run that way consistently in the past, but it's just kind of a battle with every plan, to try to get there right now. Those are the main factors, some of what affected our utilization, it contributed -- people may not be thinking about, for example, we had days down for the Oregon fires. So we've had those kind of things happened as well, that have contributed to the utilization challenges that are non-COVID related.

Analyst
Daniel Moore

Absolutely. In terms of the supply chain issues, do you see an end insight not this quarter obviously or this month. But is that a six-month -- three-month phenomenon, six-month phenomenon? COVID obviously more difficult crystal ball, but just wondering if you see some of those of supply chain constraints working themselves out over a couple of quarters?

Executive
William C. Boor

Yeah, it certainly would help over a couple of quarters. In talking, we've had -- it's been almost across the Board, it's hard to even zero in on one piece of the supply that we need. But we have had different suppliers tell us that they expect to be challenged well into the first calendar quarter. So, it's going to take some time and hopefully early in the calendar year, we will be feeling a little bit better than we do right now. But that's...

Analyst
Daniel Moore

Okay.

Executive
William C. Boor

Still expect to have, Dan.

Analyst
Daniel Moore

Is 70% capacity utilization, a decent base rate to utilize for this current quarter, at least for the time being?

Executive
William C. Boor

We've been bouncing right in that 65% to 70% rate the last two quarters, including the first one, it was so disruptive. So, and that's kind of within the process