PHOENIX, Jan. 24, 2024 (GLOBE NEWSWIRE) -- Cavco Industries, Inc. (Nasdaq: CVCO) will release earnings for the third quarter ended December 30, 2023 on Thursday, February 1, 2024 after the close of market. Senior management will discuss the results in a live webcast the following day, Friday, February 2, 2024 at 1:00 p.m. Eastern Time. Date:   February 2, 2024 Time:   1:00 p.m. ET            Listen via Internet: https://investor.cavco.com/ Listen via Telephone: To participate in the call, please register he ...

Financial Data and Key Metrics Changes - The company's net revenue for Q2 2024 was $452 million, down $125.4 million or 21.7% compared to $577.4 million in the prior year [77] - Gross margin decreased to 23.2%, down 1.6% from the previous quarter and 3.6% from a year ago [69] - Pretax profit was down 44.3% to $51.7 million from $92.8 million in the prior year period [81] - Net income to stockholders was $41.5 million, compared to $74.1 million in the same quarter of the prior year [108] Business Line Data and Key Metrics Changes - In the factory-built housing segment, net revenue was $434.1 million, down 22.4% from $559.6 million in the prior year quarter, primarily due to a decline in homes sold and average revenue per home [77] - The Financial Services segment net revenue increased 1.1% to $18 million, driven by more insurance policies and higher premium rates [78] - Gross profit in the factory-built housing segment decreased by 350 basis points to 23.2% due to lower average selling prices [79] Market Data and Key Metrics Changes - The company ended the period with backlogs consistent with last quarter at $170 million, equating to five to seven weeks of production [73] - Factory utilization for Q2 2024 was approximately 60%, with nearly 70% excluding scheduled downtime [104] - The company reported a healthy level of homebuyer interest, reflected in online leads and store traffic [68] Company Strategy and Development Direction - The company is focused on addressing the housing deficit in the U.S. and is prepared to increase production as market conditions improve [102] - Management emphasized the importance of maintaining a strong balance sheet to pursue both organic and external investment opportunities [102] - The retail business has adapted well to changing market conditions, with same-store sales slightly up [74] Management's Comments on Operating Environment and Future Outlook - Management noted that while the macroeconomic environment remains challenging, there has been a quarter-to-quarter order improvement, particularly from street dealers [99] - The company is ready to ramp up production as soon as market conditions support it, maintaining healthy profitability and cash flow [100] - Management expressed confidence in the ongoing demand for affordable housing despite current economic pressures [142] Other Important Information - The company generated strong cash flow, returning $47 million through share repurchases and adding $25 million to its cash balance [75] - Stockholders' equity exceeded $1 billion, up $43 million from the previous fiscal year [85] - Interest income for the quarter was $5.8 million, up 214% from the prior year, primarily due to higher interest rates [107] Q&A Session Summary Question: What are the expectations for orders and shipments in fiscal Q3? - Management indicated that while entering a typically slower period, there has been a positive trend in orders, and they are monitoring macroeconomic factors closely [114][115] Question: Can you elaborate on the gross margin impacts? - Management noted that the gross margin was affected by input costs, mix, and fixed cost absorption, with a focus on maintaining efficiency in cost structures [117][118] Question: Is there a shift towards lower price point entry-level homes? - Management confirmed a trend towards more single-section homes, reflecting affordability challenges faced by buyers [121][142] Question: Are there constraints on acquisitions due to industry concentration? - Management stated they do not feel constrained by cash flow or balance sheet strength, focusing instead on ensuring fair deals [164]

PART I. FINANCIAL INFORMATION [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) The Consolidated Balance Sheets provide a snapshot of the company's financial position as of September 30, 2023, and April 1, 2023, detailing assets, liabilities, and stockholders' equity, showing an increase in total assets and stockholders' equity Consolidated Balance Sheet Highlights (September 30, 2023 vs. April 1, 2023) | Metric | Sep 30, 2023 ($ in thousands) | Apr 1, 2023 ($ in thousands) | |:----------------------------|:------------------------------|:-----------------------------| | Total Current Assets | 875,443 | 804,579 | | Total Assets | 1,368,791 | 1,307,975 | | Total Current Liabilities | 305,475 | 293,391 | | Total Stockholders' Equity | 1,019,255 | 976,286 | [Consolidated Statements of Comprehensive Income](index=4&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) The Consolidated Statements of Comprehensive Income show the company's financial performance for the three and six months ended September 30, 2023, compared to the prior year, highlighting significant decreases in net revenue, gross profit, and net income attributable to stockholders Consolidated Statements of Comprehensive Income Highlights (Three Months Ended) | Metric | Sep 30, 2023 ($ in thousands) | Oct 1, 2022 ($ in thousands) | Change ($) | Change (%) | |:----------------------------------------|:------------------------------|:-----------------------------|:-----------|:-----------| | Net revenue | 452,030 | 577,392 | (125,362) | (21.7)% | | Gross profit | 106,957 | 157,599 | (50,642) | (32.1)% | | Income from operations | 45,451 | 90,705 | (45,254) | (49.9)% | | Net income attributable to stockholders | 41,539 | 74,116 | (32,577) | (43.9)% | | Basic EPS | $4.80 | $8.32 | ($3.52) | (42.3)% | | Diluted EPS | $4.76 | $8.25 | ($3.49) | (42.3)% | Consolidated Statements of Comprehensive Income Highlights (Six Months Ended) | Metric | Sep 30, 2023 ($ in thousands) | Oct 1, 2022 ($ in thousands) | Change ($) | Change (%) | |:----------------------------------------|:------------------------------|:-----------------------------|:-----------|:-----------| | Net revenue | 927,905 | 1,165,730 | (237,825) | (20.4)% | | Gross profit | 224,836 | 302,323 | (77,487) | (25.6)% | | Income from operations | 101,650 | 169,293 | (67,643) | (40.0)% | | Net income attributable to stockholders | 87,896 | 133,718 | (45,822) | (34.3)% | | Basic EPS | $10.15 | $15.01 | ($4.86) | (32.4)% | | Diluted EPS | $10.05 | $14.88 | ($4.83) | (32.5)% | [Consolidated Statements of Cash Flows](index=5&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) The Consolidated Statements of Cash Flows detail the cash generated and used by operating, investing, and financing activities for the six months ended September 30, 2023, showing a net increase in cash, with a decrease in operating cash flow but a significant reduction in cash used for investing activities Consolidated Statements of Cash Flows Highlights (Six Months Ended) | Metric | Sep 30, 2023 ($ in thousands) | Oct 1, 2022 ($ in thousands) | Change ($) | |:--------------------------------------------------|:------------------------------|:-----------------------------|:-----------| | Net cash provided by operating activities | 160,200 | 162,942 | (2,742) | | Net cash used in investing activities | (6,421) | (34,933) | 28,512 | | Net cash used in financing activities | (42,240) | (39,224) | (3,016) | | Net increase in cash, cash equivalents & restricted cash | 111,539 | 88,785 | 22,754 | | Cash, cash equivalents & restricted cash at end of period | 395,029 | 348,119 | 46,910 | [Notes to Consolidated Financial Statements (Unaudited)](index=6&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements%20(Unaudited)) These notes provide detailed disclosures supporting the unaudited consolidated financial statements, covering accounting policies, segment information, acquisitions, and specific financial instrument details, offering context to the company's financial performance and position [1. Basis of Presentation](index=6&type=section&id=1.%20Basis%20of%20Presentation) These notes outline the basis of financial statement preparation, segment operations, and recent acquisition details - The financial statements are prepared in accordance with SEC rules for Form 10-Q, condensing certain GAAP disclosures[27](index=27&type=chunk) - The Company operates in two segments: factory-built housing (wholesale and retail) and financial services (manufactured housing consumer finance and insurance)[56](index=56&type=chunk) - Executed an amendment to acquire the remaining **30%** ownership of Craftsman Homes, LLC for cash on December 31, 2023, reclassifying the noncontrolling interest as mandatorily redeemable[58](index=58&type=chunk) [2. Revenue from Contracts with Customers](index=7&type=section&id=2.%20Revenue%20from%20Contracts%20with%20Customers) This section details the breakdown of net revenue by segment and source for the reported periods Net Revenue by Segment and Source (Six Months Ended) | Source | Sep 30, 2023 ($ in thousands) | Oct 1, 2022 ($ in thousands) | |:----------------------------------------|:------------------------------|:-----------------------------| | Factory-built housing: Home sales | 849,784 | 1,099,777 | | Factory-built housing: Delivery, setup & other | 41,391 | 32,422 | | Financial services: Insurance commissions | 1,916 | 2,426 | | Financial services: All other sources | 34,814 | 31,105 | | **Total Net Revenue** | **927,905** | **1,165,730** | [3. Restricted Cash](index=7&type=section&id=3.%20Restricted%20Cash) This note provides a breakdown of restricted cash, distinguishing between current and non-current portions Restricted Cash Composition ($ in thousands) | Category | Sep 30, 2023 | Apr 1, 2023 | |:----------------------------------------------|:-------------|:------------|\ | Cash related to CountryPlace customer payments | 15,567 | 11,123 | | Other restricted cash | 2,198 | 940 | | **Total Restricted Cash** | **17,765** | **12,063** | | Less current portion | (17,180) | (11,728) | | **Non-current Restricted Cash** | **585** | **335** | [4. Investments](index=8&type=section&id=4.%20Investments) This section details the composition of the company's investments and reports net investment gains or losses Investments Composition ($ in thousands) | Category | Sep 30, 2023 | Apr 1, 2023 | |:----------------------------------|:-------------|:------------| | Available-for-sale debt securities | 19,821 | 18,555 | | Marketable equity securities | 10,121 | 9,989 | | Non-marketable equity investments | 4,923 | 5,073 | | **Total Investments** | **34,865** | **33,617** | | Less short-term investments | (14,358) | (14,978) | | **Long-term Investments** | **20,507** | **18,639** | Net Investment Gains/Losses on Marketable Equity Securities (Six Months Ended) | Metric | Sep 30, 2023 ($ in thousands) | Oct 1, 2022 ($ in thousands) | |:------------------------------------------------|:------------------------------|:-----------------------------| | Net (loss) gain recognized during the period | 275 | (2,575) | | Less: Net (gain) loss recognized on securities sold | (130) | 290 | | Unrealized (loss) gain recognized on securities still held | 145 | (2,285) | [5. Inventories](index=9&type=section&id=5.%20Inventories) This note provides a breakdown of inventory components, including raw materials, work in process, and finished goods Inventories Composition ($ in thousands) | Category | Sep 30, 2023 | Apr 1, 2023 | |:----------------|:-------------|:------------| | Raw materials | 85,663 | 92,045 | | Work in process | 28,290 | 29,022 | | Finished goods | 130,523 | 142,083 |\ | **Total** | **244,476** | **263,150** | [6. Consumer Loans Receivable](index=10&type=section&id=6.%20Consumer%20Loans%20Receivable) This section details the composition of consumer loans receivable, including an analysis of the allowance for loan losses and geographic concentrations Consumer Loans Receivable Summary ($ in thousands) | Category | Sep 30, 2023 | Apr 1, 2023 | |:----------------------------------------|:-------------|:------------| | Loans held for investment, securitized | 18,756 | 21,000 | | Loans held for investment | 13,045 | 13,117 | | Loans held for sale | 5,208 | 10,846 | | Construction advances | 84 | 706 | | Deferred financing fees and other, net | (312) | (368) | | Allowance for loan losses | (1,045) | (1,153) | | **Total Consumer Loans Receivable, net**| **35,736** | **44,148** | | Less current portion | (10,503) | (17,019) | | **Long-term Consumer Loans Receivable, net** | **25,233** | **27,129** | Allowance for Consumer Loan Losses (Six Months Ended, $ in thousands) | Metric | Sep 30, 2023 | Oct 1, 2022 | |:-------------------------------------|:-------------|:------------| | Allowance at beginning of period | 1,153 | 2,115 | | Change in estimated loan losses, net | (108) | (376) | | **Allowance at end of period** | **1,045** | **1,739** | - **40%** of consumer loans receivable concentrated in Texas and **14%** in Florida as of September 30, 2023[68](index=68&type=chunk) [7. Commercial Loans Receivable](index=11&type=section&id=7.%20Commercial%20Loans%20Receivable) This note provides a summary of commercial loans receivable, including their characteristics and geographic concentrations Commercial Loans Receivable Summary ($ in thousands) | Category | Sep 30, 2023 | Apr 1, 2023 | |:----------------------------------------|:-------------|:------------| | Loans receivable | 96,148 | 103,726 | | Allowance for loan losses | (1,497) | (1,586) | | Deferred financing fees, net | (183) | (163) | | **Total Commercial Loans Receivable, net**| **94,468** | **101,977** | | Less current portion | (50,542) | (44,054) | | **Long-term Commercial Loans Receivable, net** | **43,926** | **57,923** | Commercial Loans Receivable Characteristics | Metric | Sep 30, 2023 | Apr 1, 2023 | |:-------------------------------------|:-------------|:------------| | Weighted average contractual interest rate | **7.5%** | **7.6%** | | Weighted average months outstanding | **11** | **9** | - Concentrations of commercial loans receivable in New York (**16%**) and California (**11%**) as of September 30, 2023[71](index=71&type=chunk) - No commercial loans were considered watch list or nonperforming as of September 30, 2023, or April 1, 2023[95](index=95&type=chunk) [8. Property, Plant and Equipment, net](index=13&type=section&id=8.%20Property,%20Plant%20and%20Equipment,%20net) This section details the composition of property, plant, and equipment, along with depreciation expense for the periods Property, Plant and Equipment, net ($ in thousands) | Category | Sep 30, 2023 | Apr 1, 2023 | |:--------------------------------|:-------------|:------------| | Buildings and improvements | 169,331 | 167,291 | | Machinery and equipment | 75,381 | 76,826 | | Land | 39,822 | 39,822 | | Construction in progress | 8,228 | 5,472 | | Accumulated depreciation | (69,098) | (61,133) | | **Total PP&E, net** | **223,664** | **228,278** | Depreciation Expense ($ in millions) | Period | Sep 30, 2023 | Oct 1, 2022 | |:-------------------------------------|:-------------|:------------| | Three months ended | **$4.3** | **$3.8** | | Six months ended | **$8.4** | **$7.3** | [9. Leases](index=13&type=section&id=9.%20Leases) This note outlines the company's lease balances and the present value of minimum lease payments for operating and finance leases Lease Balances ($ in thousands) | Category | Sep 30, 2023 | Apr 1, 2023 | |:--------------------------------|:-------------|:------------| | Operating lease ROU assets | 34,413 | 26,755 | | Finance lease assets | 6,044 | 6,088 | | **Total Lease Assets** | **40,457** | **32,843** | | Current Operating lease liabilities | 5,027 | 6,262 | | Current Finance lease liabilities | 78 | 347 | | Non-current Operating lease liabilities | 30,529 | 21,678 | | Non-current Finance lease liabilities | 6,127 | 5,896 | | **Total Lease Liabilities** | **41,761** | **34,183** | Present Value of Minimum Lease Payments (Fiscal 2024-Thereafter, $ in thousands) | Fiscal Year | Operating Leases | Finance Leases | Total | |:------------------------|:-----------------|:---------------|:------| | Remainder of fiscal 2024 | 3,254 | 178 | 3,432 | | Fiscal 2025 | 6,582 | 356 | 6,938 | | Fiscal 2026 | 6,160 | 356 | 6,516 | | Fiscal 2027 | 3,655 | 356 | 4,011 | | Fiscal 2028 | 3,141 | 356 | 3,497 | | Fiscal 2029 | 3,072 | 356 | 3,428 | | Thereafter | 18,140 | 10,230 | 28,370| | **Total Payments** | **44,004** | **12,188** | **56,192**| | Less: Interest | (8,448) | (5,983) | (14,431)| | **Present Value** | **35,556** | **6,205** | **41,761**| [10. Goodwill and Other Intangibles](index=14&type=section&id=10.%20Goodwill%20and%20Other%20Intangibles) This section details the composition of goodwill and other intangible assets, including amortization expense and acquisition-related adjustments Goodwill and Other Intangibles, net ($ in thousands) | Category | Sep 30, 2023 Gross Carrying Amount | Sep 30, 2023 Net Carrying Amount | Apr 1, 2023 Gross Carrying Amount | Apr 1, 2023 Net Carrying Amount | |:------------------------------|:-----------------------------------|:---------------------------------|:----------------------------------|:--------------------------------| | Goodwill | 116,015 | 116,015 | 114,547 | 114,547 | | Trademarks and trade names | 16,980 | 16,980 | 16,980 | 16,980 | | State insurance licenses | 1,100 | 1,100 | 1,100 | 1,100 | | Customer relationships | 15,000 | 10,384 | 16,900 | 11,082 | | Other finite-lived intangibles| 1,114 | 541 | 1,114 | 628 | | **Total** | **150,209** | **145,020** | **150,641** | **144,337** | - Goodwill increased by **$1.0 million** due to fair value adjustments for the Solitaire Homes acquisition[78](index=78&type=chunk) Amortization Expense on Intangible Assets ($ in millions) | Period | Sep 30, 2023 | Oct 1, 2022 | |:-------------------|:-------------|:------------| | Three months ended | **$0.4** | **$0.5** | | Six months ended | **$0.8** | **$1.0** | [11. Accrued Expenses and Other Current Liabilities](index=15&type=section&id=11.%20Accrued%20Expenses%20and%20Other%20Current%20Liabilities) This note provides a breakdown of accrued expenses and other current liabilities, including salaries, customer deposits, and warranties Accrued Expenses and Other Current Liabilities ($ in thousands) | Category | Sep 30, 2023 | Apr 1, 2023 | |:---------------------------|:-------------|:------------| | Salaries, wages and benefits | 45,250 | 47,100 | | Customer deposits | 43,477 | 45,193 | | Estimated warranties | 33,015 | 31,368 | | Unearned insurance premiums| 30,449 | 27,901 | | Accrued volume rebates | 23,925 | 22,858 | | Other | 88,264 | 88,241 | | **Total** | **264,380** | **262,661** | [12. Warranties](index=15&type=section&id=12.%20Warranties) This section details the activity in the liability for estimated warranties, showing changes over the reported periods Activity in Liability for Estimated Warranties (Six Months Ended, $ in thousands) | Metric | Sep 30, 2023 | Oct 1, 2022 | |:-------------------------------------|:-------------|:------------| | Balance at beginning of period | 31,368 | 26,250 | | Charged to costs and expenses | 25,615 | 28,627 | | Payments and deductions | (23,968) | (24,036) | | **Balance at end of period** | **33,015** | **30,841** | [13. Other Liabilities](index=16&type=section&id=13.%20Other%20Liabilities) This note outlines the composition of other liabilities, including finance lease payables and mandatorily redeemable noncontrolling interest Secured Financings and Other Obligations ($ in thousands) | Category | Sep 30, 2023 | Apr 1, 2023 | |:----------------------------------------|:-------------|:------------| | Finance lease payables | 6,205 | 6,243 | | Mandatorily redeemable noncontrolling interest | 2,442 | 2,268 | | Other secured financing | 2,067 | 2,379 | | **Total** | **10,714** | **10,890** | | Less current portion | (2,922) | (3,070) | | **Long-term Other Liabilities** | **7,792** | **7,820** | [14. Debt](index=16&type=section&id=14.%20Debt) This section details the company's debt structure, including its revolving credit facility and compliance with financial covenants - The company has a **$50 million** revolving credit facility expiring in **2027**, with no outstanding borrowings as of September 30, 2023[106](index=106&type=chunk)[129](index=129&type=chunk) - The company was in compliance with all financial covenants (Consolidated Total Leverage Ratio and Consolidated EBITDA) under the Credit Agreement[106](index=106&type=chunk)[129](index=129&type=chunk) [15. Reinsurance and Insurance Loss Reserves](index=16&type=section&id=15.%20Reinsurance%20and%20Insurance%20Loss%20Reserves) This note provides information on the effects of reinsurance on premiums and the activity in reserves for claims and claims expense Effects of Reinsurance on Premiums (Six Months Ended, $ in thousands) | Metric | Sep 30, 2023 Written | Sep 30, 2023 Earned | Oct 1, 2022 Written | Oct 1, 2022 Earned | |:---------------------------|:---------------------|:--------------------|:--------------------|:-------------------|\ | Direct premiums | 20,446 | 18,047 | 14,896 | 14,388 | | Assumed premiums—nonaffiliated | 19,305 | 17,421 | 17,846 | 16,168 | | Ceded premiums—nonaffiliated | (12,565) | (12,565) | (8,643) | (8,643) | | **Total** | **27,186** | **22,903** | **24,099** | **21,913** | Activity in Reserve for Claims and Claims Expense (Six Months Ended, $ in thousands) | Metric | Sep 30, 2023 | Oct 1, 2022 | |:-------------------------------------|:-------------|:------------| | Balance at beginning of period | 10,939 | 8,149 | | Net incurred losses during the period| 19,663 | 16,586 | | Net claim payments during the period | (21,448) | (16,945) | | **Balance at end of period** | **9,154** | **7,790** | - Risk of loss is limited to **$0.2 million** per claim on typical policies after ceding **$0.2 million** of risk, with catastrophic loss coverage up to **$100 million** for occurrences exceeding **$3.0 million**[131](index=131&type=chunk) [16. Commitments and Contingencies](index=17&type=section&id=16.%20Commitments%20and%20Contingencies) This section details the company's commitments and contingencies, including repurchase agreements, construction-period mortgages, and legal matters - Maximum liability under repurchase agreements with financial institutions was approximately **$157 million** at September 30, 2023, down from **$178 million** at April 1, 2023[132](index=132&type=chunk) - Reserve for repurchase commitments decreased to **$3.7 million** at September 30, 2023, from **$5.2 million** at April 1, 2023[132](index=132&type=chunk) Construction-Period Mortgages ($ in thousands) | Metric | Sep 30, 2023 | Apr 1, 2023 | |:--------------------------------|:-------------|:------------| | Construction loan contract amount | 371 | 2,214 | | Cumulative advances | (84) | (706) | | **Net** | **287** | **1,508** | - Outstanding Interest Rate Lock Commitments (IRLCs) totaled **$31.6 million** notional amount as of September 30, 2023[133](index=133&type=chunk) - Management does not believe loss contingencies from pending legal matters are likely to have a material adverse effect on financial position, liquidity, or results of operations[134](index=134&type=chunk) [17. Stockholders' Equity and Redeemable Noncontrolling Interest](index=19&type=section&id=17.%20Stockholders'%20Equity%20and%20Redeemable%20Noncontrolling%20Interest) This note details the changes in stockholders' equity and redeemable noncontrolling interest for the reported period Changes in Stockholders' Equity (Six Months Ended Sep 30, 2023, $ in thousands) | Metric | Common Stock Shares | Common Stock Amount | Treasury Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Total Equity | Redeemable Noncontrolling Interest | |:----------------------------------------|:--------------------|:--------------------|:---------------|:---------------------------|:------------------|:-------------------------------------|:-------------|:-----------------------------------| | Balance, April 1, 2023 | 9,337,125 | 93 | (164,452) | 271,950 | 869,310 | (615) | 976,286 | 1,219 | | Net income | — | — | — | — | 87,896 | — | 87,896 | 88 | | Common stock repurchases | — | — | (47,194) | — | — | — | (47,194) | — | | Conversion to mandatorily redeemable noncontrolling interest | — | — | — | — | — | — | — | (974) | | **Balance, September 30, 2023** | **9,356,421** | **94** | **(211,646)** | **274,204** | **957,206** | **(603)** | **1,019,255**| **—** | [18. Earnings Per Share](index=20&type=section&id=18.%20Earnings%20Per%20Share) This section provides a breakdown of basic and diluted earnings per share, along with the corresponding weighted average shares Earnings Per Share (Three Months Ended) | Metric | Sep 30, 2023 | Oct 1, 2022 | |:----------------------------------------|:-------------|:------------| | Net income attributable to stockholders | **$41,539** | **$74,116** | | Basic EPS | **$4.80** | **$8.32** | | Diluted EPS | **$4.76** | **$8.25** | | Basic Weighted average shares | 8,656,537 | 8,903,703 | | Diluted Weighted average shares | 8,731,419 | 8,978,997 | Earnings Per Share (Six Months Ended) | Metric | Sep 30, 2023 | Oct 1, 2022 | |:----------------------------------------|:-------------|:------------| | Net income attributable to stockholders | **$87,896** | **$133,718** | | Basic EPS | **$10.15** | **$15.01** | | Diluted EPS | **$10.05** | **$14.88** | | Basic Weighted average shares | 8,663,430 | 8,910,933 | | Diluted Weighted average shares | 8,742,734 | 8,983,425 | [19. Fair Value Measurements](index=21&type=section&id=19.%20Fair%20Value%20Measurements) This note presents a comparison of the book value and estimated fair value of the company's financial instruments Book Value vs. Estimated Fair Value of Financial Instruments (Sep 30, 2023, $ in thousands) | Financial Instrument | Book Value | Estimated Fair Value | |:---------------------------------|:-----------|:---------------------| | Available-for-sale debt securities | 19,821 | 19,821 | | Marketable equity securities | 10,121 | 10,121 | | Non-marketable equity investments| 4,923 | 4,923 | | Consumer loans receivable | 35,736 | 38,537 | | Commercial loans receivable | 94,468 | 86,328 | | Other secured financing | (2,067) | (1,972) | [20. Related Party Transactions](index=21&type=section&id=20.%20Related%20Party%20Transactions) This section details sales to and receivables from related parties for the reported periods Sales to Related Parties ($ in millions) | Period | Sep 30, 2023 | Oct 1, 2022 | |:-------------------|:-------------|:------------| | Three months ended | **$16.0** | **$20.1** | | Six months ended | **$31.0** | **$37.3** | - Receivables from related parties included **$6.0 million** of accounts receivable and **$4.9 million** of commercial loans outstanding as of September 30, 2023[168](index=168&type=chunk) [21. Acquisition](index=22&type=section&id=21.%20Acquisition) This note provides details on the acquisition of Solitaire Homes, including the provisional fair values of acquired assets and liabilities - Acquired Solitaire Homes on January 3, 2023, for **$110.8 million**, including four manufacturing facilities and twenty-two retail locations[140](index=140&type=chunk) Provisional Fair Values of Acquired Assets and Liabilities (as of Jan 3, 2023, adjusted Sep 30, 2023, $ in thousands) | Category | Original Provisional | Adjustments | Adjusted Provisional | |:----------------------------------------|:---------------------|:------------|:---------------------| | Cash | 5,119 | (77) | 5,042 | | Investments | 334 | — | 334 | | Accounts receivable | 3,536 | (778) | 2,758 | | Inventories | 58,045 | (54) | 57,991 | | Property, plant and equipment | 36,109 | (70) | 36,039 | | Other current assets | 1,519 | — | 1,519 | | Intangible assets | 3,400 | — | 3,400 | | Total identifiable assets acquired | 108,062 | (979) | 107,083 | | Accounts payable and accrued liabilities| 11,251 | 21 | 11,272 | | Net identifiable assets acquired | 96,811 | (1,000) | 95,811 | | Goodwill | 13,970 | 1,000 | 14,970 | | **Net assets acquired** | **110,781** | **—** | **110,781** | - Goodwill increased by **$1.0 million** due to fair value adjustments during the measurement period[78](index=78&type=chunk)[141](index=141&type=chunk) [22. Business Segment Information](index=23&type=section&id=22.%20Business%20Segment%20Information) This section provides a breakdown of net revenue, income before income taxes, and total assets by the company's operating segments Net Revenue by Segment (Six Months Ended, $ in thousands) | Segment | Sep 30, 2023 | Oct 1, 2022 | |:------------------------|:-------------|:------------| | Factory-built housing | 891,175 | 1,132,199 | | Financial services | 36,730 | 33,531 | | **Total Net Revenue** | **927,905** | **1,165,730** | Income Before Income Taxes by Segment (Six Months Ended, $ in thousands) | Segment | Sep 30, 2023 | Oct 1, 2022 | |:------------------------|:-------------|:------------| | Factory-built housing | 112,051 | 170,146 | | Financial services | 287 | 1,975 | | **Total Income Before Taxes** | **112,338** | **172,121** | Total Assets by Segment (as of, $ in thousands) | Segment | Sep 30, 2023 | Apr 1, 2023 | |:------------------------|:-------------|:------------| | Factory-built housing | 1,168,127 | 1,107,555 | | Financial services | 200,664 | 200,420 | | **Total Assets** | **1,368,791**| **1,307,975** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and results of operations, including an overview of the business, industry outlook, and detailed analysis of revenue, gross profit, expenses, and liquidity [Forward-Looking Statements](index=24&type=section&id=Forward-Looking%20Statements) This section outlines the nature of forward-looking statements and the factors that could influence future financial results - Forward-looking statements discuss financial performance, operating results, strategy, liquidity, industry outlook, economic conditions, potential acquisitions, and legal risks[124](index=124&type=chunk) - Factors affecting results include manufactured housing and site-built housing industries, interest rates, inflation, labor and raw material costs, governmental regulations, and financing availability[124](index=124&type=chunk)[146](index=146&type=chunk) [Introduction](index=24&type=section&id=Introduction) This section serves as an introduction to management's discussion and analysis, referencing the unaudited consolidated financial statements - This section should be read in conjunction with the Company's unaudited Consolidated Financial Statements and related Notes in Part I, Item 1[147](index=147&type=chunk) [Company Overview](index=24&type=section&id=Company%20Overview) This section provides an overview of the company's business, including its product offerings, brand names, distribution channels, and financial services segment - Cavco Industries, Inc. designs and produces factory-built homes, park model RVs, vacation cabins, and factory-built commercial structures[148](index=148&type=chunk) - Homes are marketed under various brand names including Cavco, Fleetwood, Palm Harbor, and Solitaire, and distributed through independent and company-owned retailers (**68** U.S. retail stores, **41** in Texas)[148](index=148&type=chunk)[177](index=177&type=chunk) - Financial services segment includes CountryPlace Acceptance Corp. (mortgage seller/servicer and GNMA issuer) and Standard Casualty Company (property and casualty insurance for manufactured homes)[148](index=148&type=chunk) [Company and Industry Outlook](index=25&type=section&id=Company%20and%20Industry%20Outlook) This section discusses the company's strategic outlook, industry trends, and factors influencing future performance, including market demographics and backlog - Manufactured housing consumer demographics (young adults and **55+**) are growing, with 'first-time' and 'move-up' buyers being key segments[150](index=150&type=chunk) - Industry home shipments decreased by **27.0%** through August 2023 due to higher interest rates and inflationary pressures[178](index=178&type=chunk) - The company maintains a conservative cost structure and strong balance sheet to capitalize on market opportunities and challenges[151](index=151&type=chunk) - Efforts are focused on developing secondary market opportunities for manufactured home-only loans and expanding home-only lending programs to grow sales and reduce exposure to independent lenders[152](index=152&type=chunk)[180](index=180&type=chunk) - Backlog at September 30, 2023, was **$170 million**, a decrease of **$481 million** from October 1, 2022[154](index=154&type=chunk) - Fluctuations in material and labor costs, and potential shortages, may affect gross margins and production efficiency, though current period has not seen significant production halts[182](index=182&type=chunk) [Results of Operations](index=27&type=section&id=Results%20of%20Operations) [Net Revenue](index=27&type=section&id=Net%20Revenue) This section analyzes the company's net revenue by segment, detailing changes in factory-built housing and financial services revenue Net Revenue by Segment (Three Months Ended, $ in thousands) | Segment | Sep 30, 2023 | Oct 1, 2022 | Change ($) | Change (%) | |:------------------------|:-------------|:------------|:-----------|:-----------| | Factory-built housing | 434,066 | 559,602 | (125,536) | (22.4)% | | Financial services | 17,964 | 17,790 | 174 | 1.0% | | **Total Net Revenue** | **452,030** | **577,392** | **(125,362)**| **(21.7)%** | Net Revenue by Segment (Six Months Ended, $ in thousands) | Segment | Sep 30, 2023 | Oct 1, 2022 | Change ($) | Change (%) | |:------------------------|:-------------|:------------|:-----------|:-----------| | Factory-built housing | 891,175 | 1,132,199 | (241,024) | (21.3)% | | Financial services | 36,730 | 33,531 | 3,199 | 9.5% | | **Total Net Revenue** | **927,905** | **1,165,730**| **(237,825)**| **(20.4)%** | - Factory-built housing net revenue decreased due to lower home sales volume and selling prices, partially offset by the Solitaire Homes acquisition[157](index=157&type=chunk) - Financial services net revenue increased primarily due to more insurance policies in force, partially offset by lower interest income from acquired consumer loan portfolios[158](index=158&type=chunk) [Gross Profit](index=28&type=section&id=Gross%20Profit) This section analyzes the company's gross profit by segment, including gross profit percentages and factors affecting changes Gross Profit by Segment (Three Months Ended, $ in thousands) | Segment | Sep 30, 2023 | Oct 1, 2022 | Change ($) | Change (%) | |:------------------------|:-------------|:------------|:-----------|:-----------| | Factory-built housing | 100,507 | 149,665 | (49,158) | (32.8)% | | Financial services | 6,450 | 7,934 | (1,484) | (18.7)% | | **Total Gross Profit** | **106,957** | **157,599** | **(50,642)**| **(32.1)%** | Gross Profit as % of Net Revenue (Three Months Ended) | Segment | Sep 30, 2023 | Oct 1, 2022 | Change (%) | |:------------------------|:-------------|:------------|:-----------| | Consolidated | **23.7%** | **27.3%** | (3.6)% | | Factory-built housing | **23.2%** | **26.7%** | (3.5)% | | Financial services | **35.9%** | **44.6%** | (8.7)% | Gross Profit by Segment (Six Months Ended, $ in thousands) | Segment | Sep 30, 2023 | Oct 1, 2022 | Change ($) | Change (%) | |:------------------------|:-------------|:------------|:-----------|:-----------| | Factory-built housing | 213,875 | 289,251 | (75,376) | (26.1)% | | Financial services | 10,961 | 13,072 | (2,111) | (16.1)% | | **Total Gross Profit** | **224,836** | **302,323** | **(77,487)**| **(25.6)%** | Gross Profit as % of Net Revenue (Six Months Ended) | Segment | Sep 30, 2023 | Oct 1, 2022 | Change (%) | |:------------------------|:-------------|:------------|:-----------| | Consolidated | **24.2%** | **25.9%** | (1.7)% | | Factory-built housing | **24.0%** | **25.5%** | (1.5)% | | Financial services | **29.8%** | **39.0%** | (9.2)% | - Financial services gross profit and percentage decreased due to higher insurance claims from Arizona and Texas weather-related events, partially offset by greater realized and unrealized gains on marketable equity securities[1](index=1&type=chunk) [Selling, General and Administrative Expenses](index=29&type=section&id=Selling,%20General%20and%20Administrative%20Expenses) This section details the changes in selling, general and administrative expenses and the primary drivers behind these fluctuations Selling, General and Administrative Expenses ($ in thousands) | Period | Sep 30, 2023 | Oct 1, 2022 | Change ($) | Change (%) | |:-------------------|:-------------|:------------|:-----------|:-----------| | Three months ended | 61,506 | 66,894 | (5,388) | (8.1)% | | Six months ended | 123,186 | 133,030 | (9,844) | (7.4)% | - SG&A expenses decreased primarily from lower legal expenses, professional fees, and incentive compensation expense, partially offset by higher expenses reflecting the addition of Solitaire Homes[162](index=162&type=chunk) [Other Components of Net Income](index=29&type=section&id=Other%20Components%20of%20Net%20Income) This section provides an analysis of other components of net income, including interest income, interest expense, other income, and income tax expense Other Components of Net Income (Three Months Ended, $ in thousands) | Metric | Sep 30, 2023 | Oct 1, 2022 | Change ($) | Change (%) | |:-------------------|:-------------|:------------|:-----------|:-----------| | Interest income | 5,812 | 1,851 | 3,961 | 214.0% | | Interest expense | (257) | (233) | (24) | 10.3% | | Other income, net | 655 | 488 | 167 | (34.2)% | | Income tax expense | (10,088) | (18,613) | 8,525 | 45.8% | | Effective tax rate | **19.5%** | **20.1%** | N/A | (0.60)% | Other Components of Net Income (Six Months Ended, $ in thousands) | Metric | Sep 30, 2023 | Oct 1, 2022 | Change ($) | Change (%) | |:-------------------|:-------------|:------------|:-----------|:-----------| | Interest income | 10,430 | 3,165 | 7,265 | 229.5% | | Interest expense | (523) | (394) | (129) | 32.7% | | Other income, net | 781 | 57 | 724 | N/M | | Income tax expense | (24,354) | (38,229) | (13,875) | (36.3)% | | Effective tax rate | **21.7%** | **22.2%** | N/A | (0.50)% | - Interest income primarily from cash balances in money market accounts and commercial floorplan lending[3](index=3&type=chunk) - Other income, net, primarily consists of realized and unrealized gains/losses on corporate investments and gains/losses from the sale of property, plant and equipment[163](index=163&type=chunk) [Liquidity and Capital Resources](index=30&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's liquidity position, capital resources, and cash flow activities from operations, investing, and financing - Cash and cash equivalents at September 30, 2023, combined with operating cash flow, are expected to be sufficient to fund operations and growth for the next **12 months** and foreseeable future[164](index=164&type=chunk) - Net cash provided by operating activities decreased primarily from lower net income, partially offset by reduced prepaid expenses and higher commercial loan principal payments[165](index=165&type=chunk) - Net cash used in investing activities decreased significantly, reflecting lower purchases of property, plant and equipment and strategic growth acquisitions[5](index=5&type=chunk)[210](index=210&type=chunk) - Net cash used in financing activities was primarily for common stock repurchases[194](index=194&type=chunk) Loan Originations and Sales (Six Months Ended, $ in millions) | Metric | Sep 30, 2023 | Oct 1, 2022 | |:-------------------------------------|:-------------|:------------| | Consumer loan originations | **$56.2** | **$97.2** | | Proceeds from sales of consumer loans| **$65.1** | **$100.5** | | Commercial loan originations | **$51.8** | **$49.5** | | Proceeds from collection on commercial loans | **$59.4** | **$41.8** | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=31&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) There have been no material changes to the quantitative and qualitative disclosures about market risk previously reported in the Form 10-K - No material changes from the quantitative and qualitative disclosures about market risk previously disclosed in the Form 10-K[212](index=212&type=chunk) [Item 4. Controls and Procedures](index=31&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of September 30, 2023, and there were no material changes in internal control over financial reporting during the fiscal quarter [(a) Disclosure Controls and Procedures](index=31&type=section&id=(a)%20Disclosure%20Controls%20and%20Procedures) This section confirms the effectiveness of the company's disclosure controls and procedures as evaluated by management - Disclosure controls and procedures were evaluated and deemed effective as of September 30, 2023, by the President and Chief Executive Officer and Chief Financial Officer[213](index=213&type=chunk) [(b) Changes in Internal Control Over Financial Reporting](index=31&type=section&id=(b)%20Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) This section reports on any material changes in the company's internal control over financial reporting occurred during the fiscal quarter ended September 30, 2023 - No material changes in the Company's internal control over financial reporting occurred during the fiscal quarter ended September 30, 2023[8](index=8&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=32&type=section&id=Item%201.%20Legal%20Proceedings) Information regarding legal proceedings is incorporated by reference from Note 16 to the Consolidated Financial Statements, indicating no material adverse effect is expected from pending matters - Information on legal matters is incorporated by reference from Note 16 to the Consolidated Financial Statements[198](index=198&type=chunk) - Management does not believe loss contingencies arising from pending matters are likely to have a material adverse effect on consolidated financial position, liquidity, or results of operations[134](index=134&type=chunk) [Item 1A. Risk Factors](index=32&type=section&id=Item%201A.%20Risk%20Factors) Readers are directed to carefully consider the risk factors discussed in Part I, Item 1A of the company's Form 10-K, as these could materially affect the business, financial condition, or future results - Readers should carefully consider risk factors discussed in Part I, Item 1A of the Form 10-K, as they could materially affect the business, financial condition, or future results[215](index=215&type=chunk) [Item 2. Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities](index=32&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities,%20Use%20of%20Proceeds%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company repurchased common stock during the second quarter of fiscal year 2024 under a $100 million stock repurchase program approved in August 2023. No officers or directors adopted or terminated 10b5-1 trading arrangements [Issuer Purchases of Equity Securities](index=32&type=section&id=Issuer%20Purchases%20of%20Equity%20Securities) This section details the company's common stock repurchase activities under its approved program - A **$100 million** stock repurchase program was approved on August 1, 2023[216](index=216&type=chunk) Common Stock Repurchases (July 2, 2023 to Sep 30, 2023) | Period | Total Shares Purchased | Average Price Paid Per Share | Total Shares Purchased as Part of Program | |:--------------------------------------|:-----------------------|:-----------------------------|:------------------------------------------| | July 2, 2023 to August 5, 2023 | — | $— | — | | August 6, 2023 to September 2, 2023 | — | — | — | | September 3, 2023 to September 30, 2023 | 172,941 | **$270.51** | 172,941 | - Approximate dollar value of shares that may yet be purchased under the program was **$88,949 thousand** as of September 30, 2023[200](index=200&type=chunk) [Rule 10b5-1 Plan Adoptions and Modifications](index=32&type=section&id=Rule%2010b5-1%20Plan%20Adoptions%20and%20Modifications) This section confirms that no officers or directors adopted or terminated 10b5-1 trading arrangements during the three months ended September 30, 2023 - No officers or directors adopted or terminated any 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement during the three months ended September 30, 2023[200](index=200&type=chunk) [Item 5. Other Information](index=32&type=section&id=Item%205.%20Other%20Information) This section states that all other items required under Part II are omitted due to their inapplicability - All other items required under Part II are omitted because they are not applicable[219](index=219&type=chunk) [Item 6. Exhibits](index=33&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including equity incentive plans, restricted stock unit awards, and certifications Selected Exhibits Filed | No. | Description | |:--------|:-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | 10.1* | Exhibit Cavco Industries, Inc. 2023 Omnibus Equity Incentive Plan | | 10.1.1* | Form of Cavco Industries, Inc. 2023 Omnibus Equity Incentive Plan Restricted Stock Unit Award | | 31.1 | Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | | 31.2 | Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | | 32 | Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | SIGNATURES - The report was signed by William C. Boor (Principal Executive Officer) and Allison K. Aden (Principal Financial Officer) on November 3, 2023[15](index=15&type=chunk)[204](index=204&type=chunk)

Financial Data and Key Metrics Changes - Revenue for Q1 2024 was flat at $476 million, with pretax profit slightly increasing from $59 million to $61 million [7] - Net revenue decreased by $12.4 million or 19.1% compared to the prior year's first fiscal quarter [13] - Consolidated gross profit as a percentage of net revenue was 24.8%, up 20 basis points from 24.6% in the same period last year [15] - Net income attributable to shareholders decreased by $13.2 million or 22.1% from $46.4 million to $59.6 million [25] - Cash balance increased by $80.8 million or 29.8% from $271.4 million at the end of the prior fiscal year [28] Business Line Data and Key Metrics Changes - In the factory-built housing segment, net revenue was $457.1 million, down 20.2% from $572.6 million in the prior year quarter [13] - Financial services segment net revenue increased by 19.2% to $18.8 million from $15.7 million, driven by more insurance policies and higher premium rates [15] - Factory-built gross margins remained healthy at 24.8%, supported by lower material costs [10][16] Market Data and Key Metrics Changes - Backlogs decreased from seven to eight weeks to five to six weeks, indicating production is outpacing wholesale orders [8] - Order rates were up year-over-year and significantly increased over Q4 [8] - Interest income for Q1 was $4.6 million, up 251% from the prior year quarter due to higher interest rates [24] Company Strategy and Development Direction - The company aims to responsibly deploy capital focusing on plant improvements, further acquisitions, and evaluating lending operations [20] - The acquisition of Solitaire Homes is progressing well, with a focus on developing new models and updating existing products [11] - The company is prepared to ramp up production as market demand improves, despite current reduced production schedules [29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in underlying demand based on traffic and buyer activity, despite concerns over interest rates and economic confidence [9] - The company believes it has seen the bottom of wholesale orders and anticipates returning to full production schedules as market support develops [9] - The housing affordability problem is worsening, but the underlying demand continues to increase [49] Other Important Information - Selling, general, and administrative expenses decreased to $61.7 million from $66.1 million due to lower third-party support costs [18] - The effective income tax rate was 23.5%, down from 24.7% in the prior year, reflecting the expiration of Energy Star credits [19] - A new $100 million stock repurchase program was approved, increasing total availability to $135.7 million [26] Q&A Session Summary Question: What are the expectations for orders and shipments in the near term? - Management expects orders to continue building, with backlogs stabilizing and potentially increasing, supporting production ramp-up [58][61] Question: How are margins impacted by increased claims in financial services? - Management noted that high claims were due to weather events, but they do not expect this to continue in the near term [35][36] Question: How does the company plan to manage capital allocation between stock repurchases and expanding operations? - The company plans to use stock buybacks as a balance sheet management tool while also considering expansion opportunities [46][52] Question: What is the current state of order rates across different markets? - Retail orders are increasing significantly, while community orders are lagging due to inventory issues, but improvements are expected by year-end [75][79]

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) Cavco Industries reported decreased net revenue and net income for Q1 FY2024 due to lower home sales, while strengthening its balance sheet and improving operating cash flow Financial Performance Summary (in thousands) | Financial Metric | Three Months Ended July 1, 2023 | Three Months Ended July 2, 2022 | | :--- | :--- | :--- | | **Net Revenue** | $475,875 thousand | $588,338 thousand | | **Gross Profit** | $117,879 thousand | $144,724 thousand | | **Income from Operations** | $56,199 thousand | $78,588 thousand | | **Net Income** | $46,411 thousand | $59,694 thousand | | **Diluted EPS** | $5.29 | $6.63 | Balance Sheet Highlights (in thousands) | Balance Sheet Item | July 1, 2023 | April 1, 2023 | | :--- | :--- | :--- | | **Cash and cash equivalents** | $352,234 thousand | $271,427 thousand | | **Total current assets** | $858,687 thousand | $804,579 thousand | | **Total assets** | $1,353,047 thousand | $1,307,975 thousand | | **Total current liabilities** | $293,376 thousand | $293,391 thousand | | **Total stockholders' equity** | $1,022,826 thousand | $976,286 thousand | Cash Flow Summary (in thousands) | Cash Flow Activity | Three Months Ended July 1, 2023 | Three Months Ended July 2, 2022 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $82,293 thousand | $58,240 thousand | | **Net cash provided (used) by investing activities** | $2,086 thousand | ($24,399) thousand | | **Net cash used in financing activities** | ($1,490) thousand | ($40,213) thousand | | **Net increase (decrease) in cash** | $82,889 thousand | ($6,372) thousand | [Notes to Consolidated Financial Statements](index=6&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes detail segment performance, including housing revenue decline and financial services growth, alongside loan portfolio concentration and undrawn credit facility - The company operates in two segments: **factory-built housing** (wholesale and retail) and **financial services** (consumer finance and insurance)[130](index=130&type=chunk) Revenue by Segment (in thousands) | Revenue by Segment (in thousands) | Three Months Ended July 1, 2023 | Three Months Ended July 2, 2022 | | :--- | :--- | :--- | | **Factory-built housing** | $457,109 | $572,597 | | **Financial services** | $18,766 | $15,741 | | **Total Net Revenue** | **$475,875** | **$588,338** | - As of July 1, 2023, the consumer loans receivable portfolio had significant concentration in **Texas (39%)** and **Florida (15%)**[82](index=82&type=chunk) - The company maintains a **$50 million** revolving credit facility expiring in 2027, with **no borrowings outstanding** as of July 1, 2023[16](index=16&type=chunk)[169](index=169&type=chunk) - Fair value adjustments from the Solitaire Homes acquisition resulted in an additional **$1.0 million** in Goodwill during the quarter[13](index=13&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=20&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management reported a revenue decline due to lower home sales volume, a reduced backlog, and improved gross margin from favorable material costs [Company and Industry Outlook](index=21&type=section&id=Company%20and%20Industry%20Outlook) The manufactured housing industry saw a significant decline in shipments, leading to a reduced company backlog, yet affordability remains a key advantage - Industry home shipments for the calendar year through May 2023 decreased by **29.0%** compared to the same period last year[189](index=189&type=chunk) - The company's backlog was **$177 million** at July 1, 2023, a significant decrease from **$244 million** at April 1, 2023, and **$1.0 billion** at July 2, 2022[69](index=69&type=chunk) [Results of Operations](index=22&type=section&id=Results%20of%20Operations) Net revenue decreased due to lower housing volumes and prices, while financial services grew, and gross profit margin improved from favorable material costs Revenue Analysis (Q1 FY2024 vs Q1 FY2023) (in thousands) | Revenue Analysis (Q1 FY2024 vs Q1 FY2023) | Q1 FY2024 | Q1 FY2023 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | **Factory-built housing revenue** | $457.1M | $572.6M | ($115.5M) | (20.2)% | | **Financial services revenue** | $18.8M | $15.7M | $3.0M | 19.2% | | **Total Net Revenue** | **$475.9M** | **$588.3M** | **($112.4M)** | **(19.1)%** | | **Factory-built homes sold** | 4,582 | 5,346 | (764) | (14.3)% | | **Net revenue per home sold** | $99,762 | $107,108 | ($7,346) | (6.9)% | - The gross profit percentage for **factory-built housing** increased to **24.8%** from **24.4%** in the prior year, primarily due to favorable material costs[72](index=72&type=chunk)[194](index=194&type=chunk) - Selling, general and administrative expenses decreased by **$4.5 million (6.7%)** YoY, mainly from lower legal expenses, professional fees, and incentive compensation, partially offset by the addition of Solitaire Homes[48](index=48&type=chunk)[73](index=73&type=chunk) [Liquidity and Capital Resources](index=24&type=section&id=Liquidity%20and%20Capital%20Resources) Cash and equivalents increased significantly due to improved operating cash flow from working capital management, with an undrawn revolving credit facility Cash Flow Summary (in thousands) | Cash Flow Summary (in thousands) | Three Months Ended July 1, 2023 | Three Months Ended July 2, 2022 | | :--- | :--- | :--- | | **Beginning Cash Balance** | $283,490 | $259,334 | | **Operating Activities** | $82,293 | $58,240 | | **Investing Activities** | $2,086 | ($24,399) | | **Financing Activities** | ($1,490) | ($40,213) | | **Ending Cash Balance** | **$366,379** | **$252,962** | - The increase in cash from operating activities was primarily due to reductions in accounts receivable, inventories, and prepaid expenses, which offset lower net income[104](index=104&type=chunk) - Management believes that cash on hand and cash flow from operations will be sufficient to fund operations, cover obligations, and provide for growth for at least the next 12 months[102](index=102&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=25&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes occurred in the quantitative and qualitative disclosures about market risk from the prior Annual Report on Form 10-K - There have been no material changes from the quantitative and qualitative disclosures about market risk previously disclosed in the Form 10-K[81](index=81&type=chunk) [Item 4. Controls and Procedures](index=26&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were effective, with no material changes to internal control over financial reporting during the quarter - The President and Chief Executive Officer and the Chief Financial Officer concluded that as of July 1, 2023, the company's disclosure controls and procedures were effective[109](index=109&type=chunk) - There were no material changes to the company's internal control over financial reporting during the fiscal quarter ended July 1, 2023[110](index=110&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=27&type=section&id=Item%201.%20Legal%20Proceedings) Management believes pending legal matters are unlikely to materially adversely affect the company's financial position, liquidity, or operations - Management does not believe that loss contingencies from pending legal matters are likely to have a material adverse effect on the company's consolidated financial position, liquidity, or results of operations[174](index=174&type=chunk) [Item 1A. Risk Factors](index=27&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K were identified - The company states that there are no material changes to the risk factors discussed in Part I, Item 1A of its Form 10-K[86](index=86&type=chunk) [Item 2. Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Repurchases of Equity Securities](index=27&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities,%20Use%20of%20Proceeds%20and%20Issuer%20Repurchases%20of%20Equity%20Securities) No stock repurchases occurred during the quarter, but the Board approved a new $100 million repurchase program, increasing total available funds - No stock repurchases were made during the fiscal quarter ended July 1, 2023. **$35.7 million** remained available under the existing program[111](index=111&type=chunk) - On August 1, 2023, the Board of Directors approved an additional **$100 million** stock repurchase program, increasing the total available amount for repurchases to **$135.7 million**[87](index=87&type=chunk) [Item 6. Exhibits](index=28&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications and Inline XBRL documents - The report includes certifications from the Principal Executive Officer and Principal Financial Officer as required by Sections 302 and 906 of the Sarbanes-Oxley Act of 2002[89](index=89&type=chunk)

Financial Data and Key Metrics Changes - Net income attributable to Cavco shareholders was $47.3 million, down from $53.6 million in the same quarter of the prior year, with diluted earnings per share at $5.39 compared to $5.80 [4] - Gross margins in financial services decreased to 45.7% in Q4 2023 from 58.5% in Q4 2022 due to weather events in Texas and Arizona [3] - Net revenue for the period was $476.4 million, down 5.8% or $29.1 million compared to $505.5 million in the prior year's fourth fiscal quarter [47] - Pre-tax profit decreased by 14.6% to $58.6 million from $68.6 million for the prior year period [64] Business Line Data and Key Metrics Changes - Within the factory-built housing segment, net revenue was $466.1 million, down 6.6% or $32.2 million from $488.3 million in the prior year quarter, primarily due to a decline in base business units [47] - Financial Services segment net revenue increased 18.4% to $20.3 million from $17.2 million, driven by more insurance policies in force and higher premium rates [91] Market Data and Key Metrics Changes - The company reported a 10% year-over-year decline in volumes and a 6% drop in revenue, indicating a challenging operating environment [42] - The retail inventory issue has largely been resolved, moving closer to a 1:1 ratio of homebuyer demand to manufacturer orders [44] Company Strategy and Development Direction - The company is focused on maintaining a variable cost structure to sustain profit and cash flow at lower volumes, which has been effective in the current environment [42] - The acquisition of Solitaire Homes is expected to enhance product offerings and support the company's strategic priorities [49][61] - The company is also investing in operational improvements and growth while managing its balance sheet through share buybacks [95] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about improving order rates, with net orders significantly higher compared to the last two quarters [58] - There is a positive sentiment among retailers, with healthy traffic and quotes indicating a potential increase in future orders [60] - The company anticipates that the fundamental need for homes will create positive pressure for future order improvement [60] Other Important Information - The company completed the acquisition of Solitaire Homes, which utilized approximately $106 million in net cash, leaving a strong cash balance of over $270 million [49] - Interest income for the fourth quarter was $3.9 million, up 212% from the prior year quarter, primarily due to higher interest rates on invested cash balances [48] Q&A Session Summary Question: What is the cadence of new order rates exiting Q4 and into Q1? - Management indicated that they do not expect further declines in order rates and may see a slight pickup in production [8] Question: Can you quantify the order rates and what has been seen in April and May? - Management noted that net orders on a same plant basis are up over March, indicating a significant pickup beyond seasonal trends [17] Question: What is the expected impact of the Solitaire acquisition on gross margins? - Management expects the impact of purchase accounting to continue for a couple of quarters, but long-term performance is anticipated to align with large manufacturing gross margin rates [72] Question: How does the company view the online sales channel in the future? - Management believes that a significant portion of home sales will begin with an online experience, indicating a central role in their strategy [76] Question: What is the current state of inventory levels among dealers? - Management acknowledged that while some dealers are still cautious about replacing homes, the overall inventory issue is largely resolved [110][117]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended April 1, 2023 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 000-08822 CAVCO INDUSTRIES INC. (Exact name of registrant as specified in its charter) Delaware 56-2405642 FORM 10-K (Mark One) (State or other jurisdiction of incor ...

Financial Data and Key Metrics Changes - Revenue increased by 16% year-over-year to $500.6 million, up from $431.7 million in the same quarter last year [26] - Pretax profit rose by 29% to $76.1 million compared to $58.9 million in the prior year [28] - Net income attributed to shareholders was $59.5 million, down from $79.6 million in the same period last year, with diluted earnings per share at $6.66 versus $8.57 [20] Business Line Data and Key Metrics Changes - Financial Services segment net revenue was $19.4 million, up 7.1% from $18.1 million, driven by a higher number of insurance policies [19] - In the factory-built housing segment, net revenue was $481.2 million, up 16.3% from $413.6 million, primarily due to a 15.9% increase in average revenue per home sold [26] Market Data and Key Metrics Changes - Backlog decreased by 34% sequentially to $427 million, equating to approximately 9 to 11 weeks at current production rates [13] - Cancellations were at about 60% of the previous quarter's rate, indicating a gradual improvement in order fulfillment [11] Company Strategy and Development Direction - The company successfully launched a new plant in Hamlet, North Carolina, which is fully staffed and operational [15] - A new consumer-facing digital home marketplace was launched, enhancing the homebuying experience and connecting consumers with retailers [23][24] - The acquisition of Solitaire Homes is expected to add significant value and enhance sales through its retail network [22] Management's Comments on Operating Environment and Future Outlook - Management noted that while the inventory issue is ongoing, there are early signs of a seasonal pickup in traffic and quotes, which are positive indicators for future orders [14] - The company remains optimistic about the long-term demand for manufactured housing due to the nationwide lack of affordable housing [38] Other Important Information - Gross margin as a percentage of revenue in Financial Services decreased to 46.6% from 61.2% due to weather-related impacts [27] - The company executed share repurchases totaling $34 million during the quarter [32] Q&A Session Summary Question: Trends in traffic inquiries and quotes across different markets - Management indicated that communities remain strong while street retail activity has decreased, but there are signs of optimism in January [46] Question: Production expectations given the decline in backlogs - Management expects to continue operating at reduced capacity until backlogs stabilize, with some plants adjusting to four-day work weeks [52] Question: Expectations for average selling prices as raw materials decrease - Management noted that pricing is more influenced by backlog levels and competitive dynamics rather than raw material costs alone [56] Question: Guidance on Solitaire Homes' annual revenues and shipments - Management indicated that the acquisition would increase manufacturing capacity by about 10% but cautioned that margins would be impacted in the next two quarters due to purchase accounting [72][74] Question: Insights from park operators regarding 2023 - Community operators, particularly large REITs, are maintaining growth plans and have significant capital invested, indicating steady demand [83]

| --- | --- | --- | --- | --- | --- | --- | --- | --- | |---------------------------------------------------|------------|-----------------------------------------------------------|----------|-------------------------------------------|-------|-------------------------------------|-------|---------------------------| | Activity in the liability for estimated | warranties | was as follows \nThree Months \nDecember 31, 2022 | (in \n | thousands): \nEnded \nJanuary 1, 2022 | | Nine Months \nDecember 31, 2022 ...

Cavco Industries, Inc. (NASDAQ:CVCO) Q2 2023 Results Conference Call November 4, 2022 1:00 PM ET Company Participants Mark Fusler - Corporate Controller, IR Bill Boor - President, CEO Allison Aden - EVP, CFO Paul Bigbee - CAO Conference Call Participants Daniel Moore - CJS Securities Greg Palm - Craig-Hallum Jay McCanless - Wedbush Operator Good day, and thank you for standing by. Welcome to the Second Quarter Fiscal Year 2023 Cavco Industries Earnings Call Webcast. [Operator Instructions] Please be advised ...