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Operator: Thank you for standing by and welcome to the Third Quarter Fiscal Year 2023 Cavco Industries, Inc. Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. As a reminder today’s conference call is being recorded. I would now like to turn the conference to your host Mr. Mark Fusler, Corporate Controller and Investor Relations. Please go ahead.

Mark Fusler: Good day, and thank you for joining us for Cavco Industry’s third quarter fiscal year 2023 earnings conference call. During this call, you’ll be hearing from Bill Boor, President and Chief Executive Officer; Allison Aden, Executive Vice President and Chief Financial Officer; and Paul Bigbee, 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, including the 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. This conference call also contains time sensitive information that is accurate only as of the date of this live broadcast, Friday, February 3, 2023. 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.

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

Bill Boor: Welcome and thank you for joining us today to review our results for the third quarter of fiscal 2023. This quarter, we achieved another significant year-over-year improvement in revenues and profit. Revenue was up 16% and pretax profit was 29 %. Units sold were approximately flat and the improved financial results were driven primarily from year-over-year average selling price and gross margin improvement. Operationally, while adjusting to the changing market, our plants continue the reach high levels of efficiency. We generally calculate capacity utilization using all available operating days. For the quarter, this yielded an approximate 65% utilization. However, we operated about 84% of the total available days due to holidays, weather driven downtime and market downtime.

On a days operated basis, we ran at about 80% capacity utilization. This indicates that our plants are doing the right thing by adjusting to the market conditions while remaining ready to go when orders improve. Cancellations continued during the quarter, but only at about 60% of the previous quarter’s rate. And the bulk of the cancellations were in regions that had lagged the initial stages of the downturn. So in a sense the process has been moving through the regions and for some of the earliest hit areas, cancellations are no longer a major factor. As backlogs reduced to much lower levels, the cancellations naturally become less of a factor because the order to delivery timeframe is so much closure to real time. Retailer inventories are still an issue that clouds the picture of underlying demand.

This is because wholesale orders will naturally be slower than homebuyer purchases until retailer inventories are reduced to their targets. Inventory resolution will not be an abrupt change in the market. It’s happening every day and each retailer that individually gets to their target moves us closer to a one to one relationship between homebuyer demand and manufacturing orders. Third quarter order rates were hit from all sides. The economy’s effect on consumer activity, seasonality, and the industry wide excess inventory have all resulted in declines in the backlog. Our backlog is down 34% sequentially to $427 million or approximately 9 to 11 weeks at current production rates. Well, we normally don’t get into the first quarter updates. In this market, I think it’s important to share what we’re seeing in the first month and the new year.

We are seeing early indications of a seasonal pickup in traffic as well as in quotes, which have increased considerably in January. In fact, we view quotes as a leading indicator of future orders and over the past several weeks, quotes have been at or above the level we’ve seen in the last year and a half. These observations are positive indicators about underlying demand and that we might experience with seasonal pickup in order rates. So there is reason for optimism that a pickup in demand might accelerate the inventory correction and resolve an increased wholesale orders. It’s very difficult to predict when the inventory issue will be behind us because we’re still watching the see how orders develop going into the spring. However, my best guess is we have a few more months of feeling some level of the inventory drag.

For the most part, price has held up well to this point, recognizing that there is a range of competitive pricing pressure from location to location. This is and always will be a cyclical industry and prices never stay stagnant for very long. Again, the question about near term price movements will largely be answered when we see how orders develop in the coming months as well. Let me change course and touch on a few developments in our growth strategy. First, we’ve talked about this in the past. We successfully started up the new Hamlet, North Carolina plant this quarter. That plant is fully staffed with a strong management team and production of employees that carried over from the prior owner’s volumetric building operation. We needed to execute a complex transition to ready the plant for HUD production.

And that project was delivered on time and on budget. So really a great job by everyone at both in Hamlet. On January 3, we closed on the previously announced Solitaire Homes acquisition. We’re excited about the opportunities this combination brings. Solitaire has four production lines as well as 22 retail stores. We anticipate significant value added opportunities that include filling out product lines across the combined retail network, bringing best practices to the Solitaire production facility, and accessing their retail network to enhance sales in our insurance company. I’d also like to take a minute to discuss our work in the area of digital marketing. I might not talk enough about developments we are prospectively working on in the company.

So it’s important for me to make it a point to tell you when our major company efforts come to fruition. This is one of the situations because we’ve been working on this for some time now and have reached a big milestone. In January, we went live with cavcohomes.com, our new consumer facing digital home marketplace. Launching this new website makes it easier for homebuyers to discover and research 1,500 manufactured, modular and park model floor plans, and 2,700 stock models across our flagship brands. It also connects them to our 1,500 retailers and communities based on their geographic area. The home shopper can seamlessly research floor plans, photos, videos, virtual tours and product availability using any smart device. This new site enhances the experience for our retailers as well.

They now have the ability to have their own pricing photos, videos and special offers to the dealer specific microsites that we are providing for them. The site is integrated with our ERP system, giving retailers and customers easy access to dealer and product information, as well as current availability. And perhaps most importantly, our dealers benefit from the directed leads and phone calls generated by consumers using this digital marketplace. I know that’s a mouthful, but this is really a major milestone. It opens up a new era for Cavco to build our brand nationally and to more effectively reach and serve our customers. Launching with the site is the culmination of a tremendous collaboration between our technical and marketing teams. Through this work, we’ve not only built site, we’ve built a powerful organizational capability in the team.

And that digital marketing team under the leadership of Colleen Rogers, our Senior VP of Marketing Communications, will continue to add an improve upon the foundation they’ve created for the benefit of our homebuyers and retail partners. With that, I’d like to turn it over to Allison to discuss the quarter’s financial results in more detail.

Allison Aden: Thank you, Bill. Net revenue for the period was $500.6 million, up 16% or $68.9 million compared to $431.7 million during the prior year’s third fiscal quarter. Within the factory built housing segment, net revenue was $481.2 million, up 16.3% or $67.6 million compared to $413.6 million in the prior year’s third quarter. This increase was primarily due to a 15.9% increase in average revenue per home sold due to product pricing increases. Financial Services segment net revenue was $19.4 million, up 7.1% or $1.3 million from $18.1 million. This year-over-year increase was due to a higher number of insurance policies in force. Consolidated gross profit as a percentage of net revenue was 26.2% consistent with the 26.7% in the same period last year.

In the factory built housing segment, gross profit percentage increased to 25.5% in Q2 of 2023 versus 25.2% in Q3 of 2022, primarily due to product pricing. Gross margin as a percentage of revenue in Financial Services decreased to 46.6% in Q3 of 2023 from 61.2% in Q3 of 2022 due to the impact of weather related events in Arizona and Texas. Selling, general and administrative expenses were $58.9 (ph) million or 11.8% of net revenue compared to $60.3 million or 14% of net revenue during the same quarter last year. The SG&A dollar decrease is primarily due to lower cost of third-party consultants assisting with the energy tax credit project and was partially offset by greater incentive and commission wages on improved earnings. Net other income was $3.2 million compared to $4.3 million in the prior year quarter.

The decrease is primarily driven by $2.4 million in lower unrealized gains of corporate equity securities, partially offset by higher interest income earned on commercial loans and cash balances. Pretax profit was $76.1 million up 29.2% or $17.2 million compared to $58.9 million in the prior year period. The effective income tax rate was 21.7% compared to a benefit of 35.1% in the same period last year. Our third quarter of fiscal 2022 income tax included a non-recurring benefit of $34.4 million, pretax credits related to the sale of energy efficient homes. Excluding this item, our tax expense as a percentage of pretax income would have been 23.3% in that period. Net income attributed to Cavco shareholders was $59.5 million compared to net income of $79.6 million in the same period last year, the diluted earnings per share were $6.66 versus $8.57 per share.

In addition, I note our next quarter will include the results of our recent acquisition of Solitaire Homes. Through that acquisition, we acquired finished home inventory at the retail site. Purchase accounting requires us to record that inventory at fair value upon acquisition, which means we’ll not recognize a profit upon sale of those homes. As a result, we will see an impact to our margins of approximately 150 basis points to 200 basis points in the next couple of quarters as we sell through these homes. This is the same dynamic that happens on all acquisitions and the cash we will receive for these homes is not affected by the accounting treatment. We are bringing this to your attention because of the amount of inventory we are purchasing, which is driven by the fact that we’re purchasing several retail locations.

Before we discuss the balance sheet, I’d like to take a minute to highlight that we continue to execute on our capital allocation priorities with the recently closed acquisition of Solitaire Homes, the opening of our Glendale, Arizona and Hamlet, North Carolina manufacturing facilities and our share repurchase of 34 million in the quarter. The purchase of Solitaire Homes will utilize approximately $93 million in cash before closing adjustments, leaving us with just over $280 million in cash subsequent to the purchase. We will continue to appropriately deploy this capital including share repurchases. Now I’ll turn it over to Paul to discuss the balance sheet.

Paul Bigbee: Thanks, Allison. Today, I’m going to walk through changes in the December 31, 2022 balance sheet compared to April 2, 2022. The cash balance was $376.1 million, up 54% or $131.9 million from the end of the prior fiscal year. The increase is primarily due to net income adjusted for non-cash items and changes in working capital, providing cash of approximately $230 million. This amount was partially offset by common stock buybacks of $73 million and purchases of property, plant and equipment, primarily at our new facilities in Hamlet, North Carolina and Glendale, Arizona. Investments, including short-term, decreased primarily due to the return of capital from one of our joint ventures involved with home sales. Inventories decreased due to lower raw materials and a decline in inventory at the retail lots.

Prepaid and other assets were higher from greater prepaid income taxes, partially offset by lower assets recorded in regard to the repurchase option on delinquent loans that have been sold to Ginnie Mae. Property, plant and equipment is up primarily due to the purchase of the facility in Hamlet, North Carolina and continued development of the Glendale, Arizona facility as discussed previously. Accrued expenses and other current liabilities increased from higher rebates payable, more setup, freight, combination work and warranty reserves, all on higher sales. Lastly, stockholders’ equity was approximately $955.5 million, up 15.1% or $125 million from the end of the prior fiscal year. This completes the financial report, and I’ll turn it back to you, Bill.

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Bill Boor: Thanks, Paul. As Allison and Paul explained, our balance sheet remains very healthy, which supports a continuation of the consistent capital allocation path we’ve been delivering upon. While the industry is working through the abrupt (ph) quarter drop off for the past several months and the resulting decrease in backlogs, we view these mini cycles as something to be well managed within the much bigger picture of the dire need for housing. We view the return to a strong market where manufactured housing demand stretches available capacity is inevitable given the nationwide lack of affordable housing. And we feel very good about our continuing strategy. We’ll continue to invest in operational improvements and growth, and we will continue using share repurchases to responsibly manage the balance sheet. With that, Valerie, please open the line for questions.

Operator:

A – Mark Fusler: All right. Dan Moore, are you with us? I think I see you in the queue.

Daniel Moore: I am indeed. I did not hear the prompt there.

Bill Boor: Yeah. Go ahead, Dan.

Daniel Moore: Good morning. Thanks for taking the question. Appreciate it. Maybe start with Bill, just can you delineate at all between trends in terms of traffic inquiries, quotes across retail versus REITs and institutions as well as maybe community developers, just your different end markets. Are you seeing — what are you seeing across them? And are you seeing more interest from customers trading down from traditional site built, even if it’s not translating directly to orders because of the inventory issue.

Bill Boor: Yeah. I can take a stab at that. First, I think we’ve been pretty consistent through this time period that communities have remained strong. So the big impact we’ve seen recently of decreased retail activity has mostly been more of the street retailer side. So I’d say communities continue to be strong. And a lot of our comments here, which I don’t — I want to present a very balanced picture, right? We’ve got a few data points here in January. We thought it was important to talk about January because I know my level of interest in trying to figure out where we’re going here. It’s just a few data points, but they’re encouraging data points. Most of that reflects what I would characterize as a generally optimistic mood on the street retailer side coming back up.

So communities have been consistent, Street retailers slowed down. The inventory is still there, but there looks to be some reason for some optimism with the data points we have in January. As far as the trade down, I think that’s been consistently happening. And I’m always a little bit frustrated because we haven’t figured out a great way to give people a sense of the magnitude of that dynamic, but we know it goes on, right? And we know it because we’ve got retail that’s having — that’s talking to folks that might come in and say, I didn’t expect that manufacturer helps. But given the way things are going, I want to see what you’ve got and they end up buying something they’re happy with. And I think we also hear it from our independent retailers.

So I can’t really just give you any sense of how big that trend is. But I know that it certainly is something that this industry has taken some ground on over the last couple of years, actually, with the run-up in pricing. Does that cover it, Dan? Did you have another aspects I missed?

Daniel Moore: No, that’s very helpful. Kind of switching gears, I guess, a little bit. Backlog about nine to 11 weeks. Do you — how should we think about production over the next, say, one to two quarters? Do you expect to curtail production given the decline in backlogs? Are you comfortable continuing to produce over 4,000 homes before we — obviously, before we add layer in Solitaire, given the order rates that you’re seeing, just trying to think about how you’re kind of managing that backlog versus when you need to see a significant uptick in orders.

Bill Boor: Yeah. It’s probably a really important question to talk about for a minute because the last couple of years, we reported backlog numbers and it was just across the board, right? I mean everything was going up, and it didn’t — there wasn’t much differentiation region to region, and it didn’t really matter because the numbers were big, right, Dan. But to expand on your question a little bit and give you a little bit more flavor, when we do that kind of estimate of weeks, that’s very much an average now in a situation like this. And the situation does vary from plant to plant, region to region, meaning we do have plants that have considerably less backlog, and we’ve got some that have very, very strong backlogs. So I told you in the scripted part of the call that we did have some market downtime this past quarter.

And that takes different forms, extended holiday outages that we took advantage of where backlogs were lower. And some of our plants, a good number of our plants, actually, have adjusted to four day work weeks. So that was what was going and that kind of lowered our running time of available days to about 84%. And we’re continuing in that mode until those individual plants that see even the lower end backlog in weeks, they start to see it stabilize and come up. So a very long winded kind of conceptual answer to you, but I do expect that we’ll still not operate all available days. But as we see cancellations abate and get closer to a 1:1 flow-through of homebuyer orders, which I think is happening every day. And if we get kind of the seasonal order pickup that we’re starting to see signs of, that’s all good news for reducing that market downtime.

Just I’ll throw this in, again, we’re always a little bit hesitant to get into the mode of giving up to the minute updates on these calls. We’d like to focus on the quarter we’re reporting on. But I did comment on quotes being significantly up. Also kind of tell you that we looked at orders written, right, not net of cancellations. And last few weeks, they’ve been honestly comparable to about late summer, early fall of last year. So I’m going to keep qualifying my statements at a couple of data points doesn’t mean we’re out of the woods by any means, but they’re good data points.

Daniel Moore: No, that’s really helpful, Bill. I guess and I know you don’t want to get into the exact guidance in terms of production number of units. But it sounds like Q4, the last quarter was a reasonable proxy for where we will be, give or take, in the short term versus a big leg down or anything of that nature?

Bill Boor: Yes.

Daniel Moore: Lastly, maybe one or two more ASPs, just expectations as raw materials come down, we expect those to continue to tick modestly lower?

Bill Boor: Yeah. I’ve kind of always maybe a little bit of an outlier on this question because I read a little bit less to materials and being a direct relationship and a little bit more to how backlogs are going and how competitive it gets for manufacturing orders. And there, again, I apologize that I can’t give you a generalized answer, but it really is playing out in local markets. We have seen some markets where backlogs dropped quickly and to lower levels where there’s been some tax sliding on price. And we’ve seen in others where it just doesn’t make sense to reduce price because the backlog still remain or the issue of dealer inventories is really what’s restricting orders, not a reduction in price. So again, hard to generalize. We are in a more competitive environment in some geographies and this backlog stabilize, I think we’ll be able to make it through this with not a lot of price leakage.

Daniel Moore: Very helpful. Lastly for me, I’ll jump out. Allison, I apologize. There were some disturbance and I missed what you said about SG&A. It was lower in the quarter sequentially. What were the factors and just how do we think about what the run rate maybe including Solitaire.

Allison Aden: Yeah. Thank you. Apologies for the background noise. Lower sequentially due to the reduction in third-party expenses. Third quarter last year, we were right in the middle of our tax energy credit efficient project. So we had a large outflow for support on that by third parties by the offset of then commissions and variable compensation that we have been slow with based on all of these. So basically, SG&A still being the component of about 40% that’s variable, now we can leverage as we expand and contract.

Daniel Moore: Okay. I’ll jump back if any follow-ups. Thank you.

Mark Fusler: Thanks, Dan.

Operator: Thank you. And our next question will come from Danny Eggerichs from Craig-Hallum. Your line is open.

Danny Eggerichs: Yeah. On for Greg Palm today. Thanks for taking the questions. I was hoping to just hit on that last one real quick on SG&A. I mean, it still was quite a bit lower than the Street was modeling here. So I guess before layering on Solitaire, is that say, $59 million number, a more reasonable baseline to go off of?

Allison Aden: I think the current quarter that we just left kind of represents more of a steady state, if you will. We did absorbed a year ago, an amount that was significant as we talked about because we were going and working with very expertise on the third-party side for the tax credits. What you’re seeing now is a more relatively related consistent level. There always has a fluctuation on SG&A, which helps our model because 40% of it is variable compensation and commission structure as is the industry that will ebb and flow with the revenue. So if you modeled at a level of SG&A revenues now, probably a realistic picture.

Danny Eggerichs: Okay. That’s helpful. I guess, just kind of in terms of the overall demand backdrop, maybe for that current quarter, what kind of cadence you saw throughout the months? I appreciate the color on January. It sounds like starting to see things pick up. And then maybe just more broadly, I guess, realistic scenarios for industry shipments for the calendar year ’23.

Bill Boor: Yeah. It’s a million dollar question, last one. What’s the question on the cadence in the last quarter?

Danny Eggerichs: Just for this fiscal quarter three, how, I guess, more of a monthly cadence, how you saw that play out throughout the quarter?

Bill Boor: Okay. Yeah. You got it, I mean, it’s interesting because you think of those months, there’s a lot of holidays in there and there’s seasonal slowing too. So it’s a little bit messy to interpret the month-to-month within that quarter. I guess, one of the things that we commented on is that cancellations were for the entire quarter were about 60% of what they were in the previous quarter, which I think is a good sign as well. So I would say cancellations were improving throughout the quarter, kind of they’re still present but they’re going down. And order rates just typically slow down more in December than we do in the other months. So a lot of things going on there.

Danny Eggerichs: Okay. I’ll leave it there for now. Thanks.

Bill Boor: Okay.

Operator: Thank you. And our next question will come from Jay McCanless from Wedbush. Your line is open.

Jay McCanless: Hey. Good afternoon. So my first question with Solitaire, any kind of guidance you could give us around what you think run rate annual revenues would be? And then also maybe what collectively calendar year ’22 shipments were from the combined entities?

Allison Aden: So I mean for Solitaire kind of what we’ve said is overarchingly that the deal went about 10% overall. So also a similar ASPs and the gross margin as the rest of the — as we work through the rest of the fiscal year. We did touch upon that for the next two quarters because of purchase accounting, the margin will be down a bit. That’s for the reasons that we know about and expect. But basically, if we can think about it as we said about in the prior quarters, which is about a 10% increase to our overall capacity.

Bill Boor: 10% manufacturing capacity.

Allison Aden: Manufacturing capacity, yes .

Bill Boor: Jay, I think you had asked revenue, don’t want people to tack that on to the company level revenue.

Jay McCanless: Understood. Just trying to make sure, get a sense of how we need to model this out. I guess the second question, what — do you feel like this might be a quarter where you’re seeing an inflection point in the backlog with cancellations starting to come down or does it feel like the inventory in the channel is still a little too heavy to make that call?

Bill Boor: Yeah. That’s where I want to be really balanced. I mean we’re trying to give you guys as much of an update view of what we’re sensing in the market as we can. But it doesn’t mean we have a clear view of how things are going to unfold here in the next couple of months. I would say, when we turned the corner on the calendar year, I was really focused on, are we going to see a seasonal uptick, right? Because the doomsday scenario would have been that when higher activity and traffic deposits ultimately orders. If we had turned the corner and the economy was kind of winning the game, and we didn’t see that seasonal — the indications that seasonal pickup that would have been — that would have been a negative sign. Just as I explained, the good news is, over a period of a few weeks here, right, you get beyond the first week or so of January, and you finally start seeing some data really kind of encouraging data around traffic, quotes as I talked in the earlier discussion.

And I think I said here in one of the answers that even orders were back up to levels that were from pretty healthy times. So the early indications are good. We’re going to keep our eye on it. There’s a lot going on in the economy. There’s still uncertainty out there. And I think all that stuff connect (ph) have to unfold for us to really know how things are going to shape up for the year. I think for the industry shipments, I’m talking calendar years now, started off with an unbelievably strong first half to push in three quarters of the year, and we finished up overall in shipments as an industry, but that was with the tail off there in the last couple of months. I think Mark (ph) might have the data, I think November was seasonally adjusted rate of November industry shipments was down in the mid-90,000 range.

So there was a bit of a tail off there. We’re probably going to start off a little slow in this calendar year. And if things go well, it will be a reverse of last year. That’s what we’re kind of hoping for.

Jay McCanless: Got you. We’ve seen mortgage rates come down really since October. Are you seeing the same type of decline in mortgage rates for chattel (ph)?

Bill Boor: No. Chattel states, chattel is a fancy sticky. So we haven’t seen chattel move really at all over the last couple of months. It tends to be independent of land home rates. So nothing to note as far as improvement there. Net chattel rates, I’m looking around because I don’t have all the data. I think chattel rates are running in the high 8%s to low 9% right now.

Jay McCanless: That’s good to know. Thank you.

Bill Boor: about half the year.

Jay McCanless: Got you. And then — and I apologize if you might touch on this earlier, but just what are you hearing from the park operators these days? How are they thinking about ’23 and what should we expect to hear from them?

Bill Boor: Yeah. I mean there’s been a bit of a rock in the whole thing. They’ve just been staying and I’m generalizing, but I think it’s a good generalization that community operators, it’s particularly large REITs that we deal with quite a bit. They’ve been pretty steady with significant growth plans, a lot of capital put to work, and they’ve got lots that they can’t get paid for if they don’t get a house on them. So I’ve talked in the past that there’s — I use a term buffer a little bit, maybe too often talking about this industry. But one of the buffers, I think we have is downturns really is within the communities where their model may be to have a person own their home and come put it on one of their lots, so they can get the land lease payments, but they also are doing a lot of buying homes and renting them.

And so they kind of become a solution for that homebuyer that can’t afford right now to own. And I think that gives some resiliency to those community operators when we look at it from a demand perspective. So they’ve been very consistent. I don’t think there’s been much at all of waning in their demand through this whole period.

Jay McCanless: That’s great to hear. I mean, what do you think now is the mix of community operators versus retail dealers and maybe versus what it was last year?

Bill Boor: Yeah. I don’t think, I’d note a huge shift. I mean, over time, that’s been about 30% community operators or about 30% of the industry. So I get your question, I mean, it stands the reason if they’re normally crazy and Street realtors take a pause. That’s going to shift a little bit. But I don’t think it’s shifted that dramatically that I focus on it personally.

Jay McCanless: Okay. Great. Thanks for taking all my questions.

Bill Boor: Yeah. Thank you.

Operator: Thank you. And I am showing no further questions from our phone lines. I’d now like to turn the conference back over to Bill Boor for any closing remarks.

Bill Boor: Okay. Thank you. Again, it’s been great to report on another quarter of strong results. I think the financial results just continue to highlight the ability of this organization. Across manufacturing, retail lending, and our insurance operations, our leaders are working really closely together, and they’re flexibly responding to the market dynamics, and they’re staying focused on the through-the-cycle opportunities, which I think is really important. So I want to thank everyone, as always, for your interest in Cavco, and we look forward to keeping you updated.

Operator: Thank you. This does conclude today’s conference call. Thank you for your participation. You may now disconnect. Everyone, have a wonderful day.