Joseph Stegmayer - Chairman, President & CEO Dan Urness - EVP, CFO & Treasurer.

Daniel Moore - CJS Securities.

Good day, ladies and gentlemen and welcome to the Cavco Industries, Inc. Fourth Quarter Fiscal Year 2016 Earnings Call and Webcast. At this time, all participants are in a listen-only model. Later, we will conduct a question-and-answer session and instructions will be given at that time.

[Operator Instructions] As a reminder, this conference call is being recorded. Now I would like to introduce your host for today’s conference Joseph Stegmayer, Chairman of the Board and CEO. Please go ahead, sir..

Thank you, and welcome everyone to our fourth quarter review and conference call. As usual, we will begin with the required disclosure and Dan Urness our Chief Financial Officer will give the financial report, I will make a few comments and we will be glad to take you questions.

Dan?.

Good day everyone. Before we begin, we respectfully remind you that certain statements made on this call either our remarks or our responses to questions may not be historical in nature, and therefore are considered forward-looking. All statements and comments today are made within the context of the Safe Harbor rules.

All forward-looking statements are subject to risks and uncertainties, many of which are beyond our control. Our actual results or performance may differ materially from anticipated results or performance. Cavco disclaims any obligation to update any forward-looking statements made on this call, and investors should not place any reliance on them.

In addition, this presentation will include certain non-GAAP financial measures. Investors should consider non-GAAP financial measures in addition to, but not as a substitute for financial measures prepared in accordance with GAAP.

For complete information on these subjects and as well as the reconciliations from non-GAAP to the most comparable GAAP financial measures are included as part of our earnings release filed yesterday and is available on our website and from other sources.

For our financial review this quarter, net revenue for the fourth fiscal quarter was $177 million up 26% compared to $141 million during the quarter of fiscal year 2015.

The increase was from higher sales volume from preexisting operations during the quarter, as well as incremental home sales activity from Fairmont Homes and Chariot Eagle operations acquired earlier in the fiscal year.

Consolidated gross profit in the fourth fiscal quarter as a percentage of net revenue was 20.7% down from 22.0% in last year’s fourth fiscal quarter. The decline was from seasonally lower gross margins on homes and higher insurance claim activity at our financial services group from an early beginning to spring, wind and hail storm season in Texas.

Selling, general and administrative expenses in the fiscal 2016 fourth quarter as a percentage of net revenue was 14.2% compared to 15.0% during the same quarter last year. The improvement was from SG&A utilization on higher sales volumes overall.

Net income for the fourth fiscal quarter of 2016 was $7 million, compared to net income of $6 million reported in the same quarter of prior year. Net income per diluted share for the fourth quarter was $0.77 versus $0.66 during last year’s fourth fiscal quarter.

Comparing the April 02, 2016 balance sheet to March 28, 2015 cash was approximately $98 million at the end of the fiscal year compared to $97 million 12 months earlier. The increase was primarily from net income and cash provided by operating activity offset by cash paid on acquisitions completed during the fiscal year.

Several balance sheet accounts increased from the Fairmont Homes and Chariot Eagle transaction. In addition to that balance sheet growth, commercial loans receivable was higher from additional inventory of floor plan lending activities during the period. And inventories also increased from higher sales activity.

Finally, stockholders’ equity grew to approximately $353 million as of April 02, 2016, up $33 million from the March 28, 2015 balance. Joe, that completes the financial report..

Okay. Thank you, Dan. So we were quite pleased with the year in total and the fourth quarter. We certainly, and I mentioned we’re impacted by the in order storm activity in the Texas, in our insurance company. But we view that as kind of a one-time event, some of the storms off record been for more than 100 years.

And so we don’t expect to see it necessarily repeat that kind of activity. Insurance company operation has been a good perform us since acquisition about five years ago. Had some very good years and we’ve had some quarters have been challenged here this past year.

As I say, we think that’s an anomaly and we should get back down to very good returns in that business. Our acquisitions are coming along, but [AQ] and we are detractor for the year. And in the sense that one operation was a turnaround situation we knew that as we required it and we’re still in that process.

Other operation while doing quite well overall had the strong seasonal influence, because of its location of the Upper Mid-West did not do well in the first calendar quarter of the year on our fourth quarter, so all-in-all we think, we have a very good platform, we’re excited about what we have in place.

We certainly have opportunities to improve the performance this year’s acquired companies and of course some of our existing operations. So we look forward to a good start to the year and we’ll be happy to take any of your questions..

Thank you. [Operator Instructions] Our first question comes from Daniel Moore of CJS Securities. Your line is open..

I want to -- obviously the industry has picked up nicely I mean shipments for the industry up in the mid-20s percent year-on-year for the quarter ending in March.

Your shipments up a little less 16%, I know we’re talking about small number of units, but any reason that you can point to for the differential, is it Fairmont, the seasonality in Fairmont any other [indiscernible] which might explain that?.

Sure Dan. You’re correct and the answer lies somewhat in geography, we’re not in some of the markets that had particularly strong growth for example Louisiana, Mississippi and kind of the deep stock market. We don’t have a presence or certainly have a strong presence in some of those states and those states have done quite well.

Also of the Northeast, although it is somewhat smaller market, they’ve had a very attractive growth this past quarter and first calendar quarter of the year.

And likewise, we’re not a factor in that Northeast market meaning New York up through New England and even in Pennsylvania, we’re not, we had some participation in Pennsylvania, but there are competitors who are much closer and actually in that state. So we don’t -- we don’t have a very strong participation there. So I think that’s largely the reason.

But also frankly can be that the timing of shipment, we’re not sure for example margin was very good shipment month for the industry you never know exactly if there was a full quarter, or someone in some particular area and that could influence it.

And then finally the fact that these numbers can indicate an increase in inventories at the retail level and we did not see that in our own stores, but by design I might add, but sometimes in the pipeline out of the shipments, these could go into the inventory pipeline of retailers and community operators. They're not necessarily pull through sales..

And is that a trend that you're in fact seeing at some of your non-owned company owned dealers?.

For what?.

For the increase in inventories?.

No, not necessarily, I'm just saying in any given time period month or a couple of month time period you can have some fluctuations and that's why we don't get too wrapped up in individual months shipment numbers, but we look at it over a longer period of time and there can be a lot of things that influence any given month, even a quarter.

And I think that's one of the -- and I'm not saying it happened I'm not sure, we don't know what's going on in inventory levels at all retailers there is real data on that.

I'm just saying we did not strongly increase our inventories in our stores, in other words we could have done still, we did not, I'm not sure of other retailers did tend to increase shipments, increase their inventories which can increase shipments of some of our competitors..

And then the uptick in overall industry level shipments, are you seeing similar growth as we start the first couple of months of your fiscal Q1 in April and May?.

I think we're seeing good activity, I think we're trying to disclose our monthly performance, but I think we're seeing good start to the quarter, yes, good order activities, traffic, what we hear from retailers including our own company stores has been pretty good.

Quality of traffic seems to be getting better, even in some case where the traffic is as high as it may have been in the past the quality of traffic seems to be good. So, every indication is that I think the industry should have a respectful year this year.

I don't think, personally I don't think we're going to see the pace that we've seen in this first quarter continue through the year, as we said even before this quarter the last quarter we expected maybe 10% growth in industry shipments for the calendar 2016..

And maybe one more and I can jump back in queue, but you touched alluded to I think in your prepared remarks show, if I look at the full year results revenue up 26% pre-tax operating margins down, a few bps, maybe 30 or 40 basis points year-over-year, I know some of it was weather and property and casualty and some of it was startup for perhaps for Chariot Eagle but are there any other factors that might be impacting operating leverage and what are your expectations for margins as we look out into fiscal '17?.

No, I don't think there are any other factors and you can see our SG&A as well in line, it's actually down as a percentage of sales, so I think we've very tight controls there.

We do need to get our operations turned and we think in the -- we're very close to getting that accomplished and so we should see a nice swing there in the fiscal year in total. And as I say at our Fairmont our Midwest operation, they are coming into their season now so they should be doing better too.

So, no, I don't see anything that -- the margins largely impacted by the issues Dan mentioned between insurance operation and these recent acquisitions. I think that's what we're seeing.

Again we don't worry too much about that we will get the margin back up, we're confident of that again we have good controls in place to keep expenses in check, so we'll see some of that fluctuation from time-to-time, but I think as a trend we'll see the margin start to get back up again..

Thank you. [Operator Instructions] I'm not showing any further questions in the queue. At this time I'd like to turn the call back over to management for any further remarks..

Okay, thank you, well we appreciate you being on the call, as always we will be available for any follow-ups and we'll look forward to report our progress in this first quarter of our fiscal '17. Thanks very much for joining today..

Ladies and gentlemen, thank you for participating in today’s conference. That concludes today’s program. You may all disconnect. Everyone have a wonderful day..