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Article Excerpt
OPERATOR: Good day, everyone and welcome to the Cavco Industries Incorporated second quarter fiscal year 2009 earnings call and webcast. This call is being recorded.
With us from the company today is the Chairman and Chief Executive Officer, Joseph Stegmayer. Please go ahead, sir.
JOSEPH STEGMAYER, CHAIRMAN, CEO, CAVCO INDUSTRIES, INC.: Thank you, Cecilia, and welcome everyone to Cavco's second quarter conference call. With me today as always is Dan Urness, our Vice President and Chief Financial Officer. And of course, before we begin, we respectfully remind you that certain statements we will make on this call, either in our remarks or in response to questions may not be historical in nature, and therefore are generally considered forward-looking. All our statements and comments -- all of our statements and comments 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 controls. 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 any such forward-looking statements.
The challenges continued this past quarter as total industry shipments of manufactured homes remained in decline. The Manufactured Housing Institute recently reported that national home shipments for the first eight months of the calendar year were down 10% for the industry as a whole. However, aided by increased production of our Texas operation compared to last year, Cavco's comparative change was increase of less than 1%. Specifically to Arizona and California, our major markets, industry wide shipments were down 37% through August 2008, while Cavco's shipments were down 34%.
Industry shipment data is not yet available for September. However, for July and August, the first two months of Cavco's second quarter, home shipments were down 18% nationally and 35% in California and Arizona. We can't add anything to all the news in recent weeks concerning the financial markets and the general economy except to say that these problems certainly have an impact on our business. Would be buyers seem even more cautious, financing a home has become a very slow process, and many new development projects that planned to use factory constructed homes are being delayed further. While the near term outlook is not promising, we think there are reasons to be optimistic about the longer range.
And we will discuss this after Dan reviews the financial results. Dan?
DAN URNESS, VP, CFO, CAVCO INDUSTRIES, INC.: Thank you, Joe. Cavco's net sales for the second quarter of fiscal year 2009 were down 22% to $30 million, from the prior year's net sales of $38.4 million. The lower sales figures are a result of reduced floor shipments which were down 11.3% as well as a 4.1% lower average selling price per floor, of approximately $25,600 versus the same quarter last year. The Company's gross profit margin for Q2 '09 was $3.7 million, or 12.3% of net sales versus $5.5 million or 14.4% of net sales for the second quarter of last year. The gross margin was increasingly challenged this quarter by reduced capacity utilization which dropped to just over 50%. The Company's backlog at quarter end was just under one week at $1.6 million.
We successfully reduced our selling, general and administrative expenses for the quarter by $410,000 to $3.1 million, compared to last year's second quarter SG&A of $3.6 million. As a percentage of net sales, SG&A was 10.5%, versus 9.2% last year. Interest income was lower by $433,000, primarily the result of generally lower interest rates from the Company's investments in US Treasuries. The current effective income tax rate for Q2 '09 is 38%, compared to 30% for Q2 '08. The rate has been largely affected by no longer realizing tax free interest income on short-term investments as well as a decline in certain state tax credits in fiscal 2009 resulting from reductions in the workforce. Fiscal 2009 second quarter income from continuing operations was $518,000, or $0.08 per diluted share, compared to $1.9 million or $0.29 per diluted share last year.
In comparing the balance sheet at September 30th, 2008 to March 31, 2008, our cash and cash equivalents balance increased $2.1 million, to $75.7 million...
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