Q3 2008 Cavalier Homes Earnings Conference Call - Final.(Broadcast transcript)

OPERATOR: Greetings. Welcome to the Cavalier Homes conference call. At this time all participants are in a listen only mode. A brief question and answer session will follow the presentation. (OPERATOR INSTRUCTIONS) As reminder, this conference is being recorded. It's now my pleasure to introduce your host, Mr. Mike Murphy, CFO of Cavalier Homes. Thank you. You may begin.

MIKE MURPHY, CFO, CAVALIER HOMES: Thank you. Before I get started I need read the following statement. During the course of this conference call we may make projections or other forward looking statements regarding future events or future financial performance of the company. We caution you that such statements are only predictions and that actual events or results may differ materially from those included or contemplated by the statements.

We refer you to the documents the company files from time to time with the SEC specifically the company last filed Form 10-K and quarterly reports on Form 10-Q. These documents including the section of the 10K entitled business risk factors and the Safe Harbor statement on page 30 described important factors that would cause the actual results of the company, the Company's operations to differ materially from those contained in or contemplated by our projections. Or forward-looking statements.

In addition, the information given the statements made in this conference call are current and reflect our views only as of the time of the conference call October 22, 2008 and is not of any subsequent time or event. We disclaim any responsibility to update any forward looking statements or other statements or information as a result of the developments occurring after this conference call. Thank you. Got that out of the way.

I would like to take a second and introduce Bobby Tesney, our interim President and Chief Executive Officer. Bobby is an Alabama native. He has been a director of Cavalier Homes since 2003. So he is familiar with our Company. And served as audit committee Chairman most of the five years. He has financial and manufacturing background in th furniture industry in both in the private and public environment.

Bobby, do you have anything to say?

BOBBY TESNEY, INTERIM PRESIDENT AND CEO, CAVALIER HOMES: Thank you, Mike. I appreciate this opportunity and the confidence our Board of Directors have placed in me to help guide us through this difficult time in our industry.

As I'm sure you all know and can appreciate, the tightening credit standards, fluctuating material prices, and the ongoing crisis in the financial market makes predictions about future manufacturing home sales very difficult. Based on information from MHI home sales in the month of August decreased 24% from August of 2007, with shipments of single section homes down 18% and shipments of multisection homes down 27%. On a year-to-date basis, industry-wide home shipments are down 10%.

The press release we issued on August 18 announced the change in management and mentioned that this change was needed to provide a new direction for Cavalier. Overall, the new direction is a fresh look at Cavalier and how it operates. Our team will focus on revenue opportunities with the goal of getting at least our share of the market.

However, our team will also continue to look at the way we do business and to right size our Company based on market conditions as we see them.

I would now like to turn the call over to Mike for his review of the operating results for the third quarter.

MIKE MURPHY: Thanks Bob. As usual I will give color to the press release and there will be more detail on the 10Q we will file either Thursday or Friday of this week. The overall almost any comparison of 2008 to 2007 is favorable. That is any individual quarter or the year to date numbers are all pretty much favorable. If you compare the third quarter of this year to the third quarter of last year, cash is up, inventories are down, gross margin improved a ton. SG&A expenses are down significantly.

Even though we were reporting the loss of $168,000 it compares favorably to last year's loss of $2.7 million in the quarter. You might recall in the third quarter of last year we had a really hard time with getting up and the early production of MEMA product. The one negative is our revenue is down, about $12.7 million for the quarter over, compared to last year.

One other note during the quarter we were able to sell a small idle facility here in Alabama for a small profit to eliminate $30,000 of carrying costs annually. The year-over-year comparison is also favorable, in the same areas …