Financial Data and Key Metrics Changes - Cavco Industries reported record results for fiscal year 2022, with revenue growth of 47% and earnings growth of 119% compared to the previous year [7] - Net revenue for Q4 2022 was $505.5 million, up 64.9% from $306.5 million in Q4 2021, with the acquisition of Commodore contributing $89.2 million to this increase [17] - Consolidated gross profit margin increased to 25.6% in Q4 2022 from 23.1% in the same period last year [20] - Net income attributable to Cavco shareholders rose 112.6% to $53.6 million, with diluted earnings per share increasing to $5.86 from $2.71 [24] Business Line Data and Key Metrics Changes - The factory-built housing segment saw net revenue increase by 69.5% to $488.3 million, driven by the addition of Commodore operations and a 31% increase in average revenue per home sold [18] - Financial services segment net revenue decreased by 7.2% to $17.2 million due to lower interest income and home loan sales income [20] Market Data and Key Metrics Changes - The backlog remained flat sequentially but was significantly up year-over-year, with orders above pre-pandemic levels [10] - Production capacity utilization improved from approximately 75% to over 80%, exceeding pre-pandemic levels [8] Company Strategy and Development Direction - The company is focused on increasing production capacity through new plants and strategic acquisitions, including the Commodore acquisition which added approximately 25% to capacity [12] - There is an emphasis on product simplification and improving staffing and retention to enhance production efficiency [9][43] - The company aims to address the housing supply deficit, particularly in urban areas, and expects to capture market share from traditional site-built housing [16] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing challenges such as labor and supply chain issues, as well as the impact of rising interest rates on affordability [13][14] - Despite these challenges, management remains optimistic about the demand for manufactured housing, particularly as buyers shift from site-built to manufactured homes due to affordability concerns [15] - The company is monitoring market dynamics closely to adjust strategies as needed [16] Other Important Information - The company completed a $100 million stock repurchase authorization, demonstrating its commitment to returning value to shareholders [12] - The effective tax rate increased to 22.1% due to lower tax benefits from stock options compared to the previous year [24] Q&A Session Summary Question: Capacity and Production Outlook - Management indicated that there is potential for continued increases in unit production due to improved productivity and labor management [29] Question: Supply Chain Challenges - Management noted that supply chain issues remain persistent, with logistics and trucking becoming significant challenges [30] Question: Margin Expectations - Management expects a continued impact of approximately 200 basis points on margins from the Commodore acquisition for the next couple of quarters [32] Question: Demand and Cancellations - Management reported that while there has been some shifting in orders due to rising prices and interest rates, overall demand remains strong [34] Question: Demand Consistency Across Channels - Management observed strong demand from community operators, particularly larger REITs, while retail demand remains stable [38] Question: Backlog Mix Changes - Management noted a steady shift towards multi-section homes, driven by affordability challenges [40] Question: Product Simplification Progress - Management confirmed that product simplification efforts are ongoing and are expected to continue to enhance production efficiencies [42] Question: Industry Capacity Increases - Management indicated that while some competitors are adding capacity, the overall increase is limited by staffing and supply chain constraints [45] Question: Consumer Delinquencies and Mortgage Rates - Management reported no significant increase in consumer delinquencies and noted that home-only mortgage rates have recently increased to a range of low-6s to mid-7s [46][47]

Revenue and Sales Performance - Net revenue for factory-built housing increased by $318.1 million, or 42.4%, from $749.9 million in 2020 to $1.1 billion in 2022[130] - The average sales price for factory-built homes increased by 24.4%, from $75,166 per home sold to $93,488[130] - The company experienced a 12.0% increase in industry home shipments in 2021 compared to the prior year[112] - Net factory-built housing revenue per home sold increased by 24.9% and 22.8% for the three and nine months ended January 1, 2022, respectively, compared to the same periods in 2020[132] Backlog and Production Capacity - The backlog as of January 1, 2022, was $1.1 billion, up $633 million, or 134.1%, compared to $472 million at December 26, 2020[122] - The company acquired Commodore, contributing $277 million to the year-over-year increase in backlog[122] - Factory utilization for the third fiscal quarter of 2022 reached approximately 80%, up from 75% in the previous four quarters[120] - Home order rates remain above pre-COVID levels, indicating strong housing demand despite moderation from previous highs[121] - The company operates 26 homebuilding production lines across various states in the U.S.[109] Financial Performance - Gross profit for factory-built housing rose to $104.1 million for the three months ended January 1, 2022, up from $47.0 million in the prior year, representing a 80.3% increase[136] - The gross profit margin for factory-built housing improved to 25.2% for the three months ended January 1, 2022, compared to 17.4% in the prior year[136] - The financial services segment reported a revenue increase of $2.0 million, or 4.0%, from $51.7 million in 2020 to $53.7 million in 2022[130] - Financial services segment revenue increased due to higher home loan sales volume, with unrealized gains on marketable equity securities decreasing to $0.5 million for the three months ended January 1, 2022, down from $1.0 million in the prior year[132] Expenses and Cash Flow - Selling, general and administrative expenses for factory-built housing increased by $25.2 million for the three months ended January 1, 2022, primarily due to the acquisition of Commodore and higher compensation expenses[139] - Cash and cash equivalents at January 1, 2022, were $339.3 million, an increase of $83.7 million compared to $255.6 million at December 26, 2020[151] - Net cash provided by operating activities increased to $126.0 million for the nine months ended January 1, 2022, compared to $91.6 million in the previous year, driven by higher net income and consumer loan sales[151] - Consumer loan originations decreased by $1.2 million to $122.9 million for the nine months ended January 1, 2022, compared to $124.1 million for the same period in 2020[152] - Cash receipts, net of amounts loaned, increased cash by $8.1 million, while the prior period net activity provided an additional $6.4 million in cash[153] - Greater cash was used in the current period for the purchase of Craftsman and Commodore, indicating strategic growth acquisitions[154] - Net cash used in financing activities was primarily for the repurchase of common stock and the full payment of secured term loans as of January 1, 2022[155] Strategic Outlook and Challenges - The company plans to evaluate potential acquisitions and strategic investments to support growth, leveraging its strong cash position[148] - The company continues to face challenges related to labor availability and supply chain disruptions affecting production efficiency[124] Tax and Accounting - The effective tax rate for the three months ended January 1, 2022, was a benefit of (35.1)%, significantly lower than 23.9% in the prior year, due to estimated non-recurring net tax credits[143] - There have been no significant changes to critical accounting policies during the nine months ended January 1, 2022, compared to those disclosed in the previous Form 10-K[156] - There were no material changes to contractual obligations as set forth in the Annual Report on Form 10-K[155] - There have been no material changes from the quantitative and qualitative disclosures about market risk previously disclosed in the Form 10-K[160]

Financial Data and Key Metrics Changes - Cavco Industries reported record revenues of $431.7 million for Q3 2022, a 49.5% increase year-over-year from $288.8 million in Q3 2021 [10] - Diluted EPS rose to $8.57 compared to $2.12 in the same quarter last year, with a significant impact from non-recurring tax credits [5][16] - The effective income tax rate was a benefit of 35.1% for Q3 2022, influenced by a non-recurring tax benefit of $34.4 million [14][15] Business Line Data and Key Metrics Changes - The factory-built housing segment saw net revenues increase by 52.7% to $413.6 million, driven by the acquisition of Commodore and a 24.4% increase in average revenue per home sold [10][12] - Total units sold increased by 22.8% to 4,424 units from 3,603 units in Q3 2021 [10] - Financial services segment net revenues increased by 0.6% to $18.1 million, attributed to a higher number of insurance policies and home loan sales [11] Market Data and Key Metrics Changes - The backlog remained consistent at $1.1 billion, representing 36 to 38 weeks of production, indicating strong demand despite higher production rates [6] - Average selling prices on a consolidated basis were slightly down compared to Q2 2022, influenced by the mix of retail and wholesale sales [7][12] Company Strategy and Development Direction - The company plans to start operations at a new facility in Glendale, Arizona, which will double park model capacity [9] - The integration of Commodore is progressing well, with expectations for improved margins as lower-priced homes in backlog are sold [9][41] - The company is focused on operational improvements and optimizing customer relationships to capture synergies from the Commodore acquisition [30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining production momentum despite ongoing labor challenges and supply chain inefficiencies [8][28] - The demand for manufactured housing remains strong, driven by demographic factors and a significant housing deficit [8][35] - Rising interest rates may pose short-term pressures, but the impact on manufactured housing is expected to be less severe compared to site-built homes [61] Other Important Information - Selling, general, and administrative expenses increased to $60.3 million, primarily due to the addition of Commodore and higher incentive wages [14] - The cash balance decreased to $267.3 million, primarily due to the acquisition of Commodore and increased inventory purchases [17] Q&A Session Summary Question: Contribution of Commodore in the quarter - Management confirmed that Commodore contributed $73 million in revenue, aligning with expectations for capacity and shipment [21][22] Question: Demand and order rates - Management clarified that order rates remain strong, with seasonal patterns observed but still above pre-pandemic levels [23][24] Question: Gross margin impacts - Management indicated that lower lumber prices benefited margins, while selling Commodore's price-protected homes in backlog had a negative impact [25][26] Question: Capacity utilization and unit growth - Management expressed optimism about maintaining unit growth and production capacity, with current utilization at 80% [27][28] Question: Synergies from Commodore acquisition - Management noted potential operational synergies from the acquisition, focusing on best practices and technology improvements [30] Question: Demand by channel and demographic - Management observed strong demand across both community and dealer channels, with a shift towards higher-end manufactured homes [35] Question: Credit quality and lending - Management reported stable credit quality, with applications coming from higher FICO score customers [56] Question: Raw material challenges - Management acknowledged ongoing challenges with raw material supply, affecting efficiency but noted minimal shutdowns [64] Question: Energy tax credit - Management explained the identification and utilization of energy tax credits as part of a continuous evaluation process [65] Question: Share repurchases - Management confirmed that share repurchases remain a priority, with $9 million repurchased in the quarter [67]

Financial Data and Key Metrics Changes - Cavco Industries reported a record quarter with revenues increasing approximately 39% year-over-year and diluted EPS up nearly 150% [8] - The company achieved a record housing gross margin of 24.1%, attributed to a 13% sequential increase in average selling price and favorable lumber pricing [8][10] - Consolidated gross profit as a percentage of net revenue was 25%, up from 20.8% in the same period last year, marking a 420 basis point improvement [22] Business Line Data and Key Metrics Changes - Within the factory-built housing segment, net revenue increased 42% to $342 million compared to $241 million in the prior year quarter, driven by a 35.3% uplift in average revenue per home sold [19] - The Financial Services segment net revenue increased 2.6% to $17.5 million, primarily due to higher home loan sales volume and servicing income [21] Market Data and Key Metrics Changes - Demand for Cavco's products remained strong, with backlogs growing to approximately $1.1 billion, representing about 40 to 42 weeks of production [9] - Active utilization for Q2 2022 was consistent with Q1 2022 at 75%, higher than the 70% utilization rate in Q2 2021 [21] Company Strategy and Development Direction - The company is focused on addressing affordable housing issues and has made strategic investments to improve production efficiency, such as a 20% throughput improvement in Fort Worth [14][15] - The acquisition of Commodore Homes is expected to enhance geographic expansion and increase capacity by 25% [16][17] Management's Comments on Operating Environment and Future Outlook - Management noted ongoing supply chain challenges affecting production, but expressed optimism about stabilizing and growing the workforce [11][12] - The company anticipates continued strong demand and believes it can sell every house it can produce, despite labor and supply constraints [10][11] Other Important Information - The cash balance decreased to $224.3 million, down $98 million from six months earlier, primarily due to the acquisition of Commodore Homes and higher inventory purchases [29] - Stockholders' equity increased to approximately $733.1 million as of October 2, up $49.5 million from April 3 [33] Q&A Session Summary Question: Sustainability of gross margin levels - Management indicated that while there was a temporary drop in lumber prices, predicting future gross margins remains challenging due to fluctuating costs [34][35] Question: Expectations for production levels - Management noted that supply chain issues remain a key concern, but they are seeing progress in stabilizing the workforce [38][39] Question: Demand environment by channel - Demand is strong across all channels, with the company capturing market share from site-built homes due to challenges faced by traditional builders [46][48] Question: Backlog management - Management explained that they have been conservative in reporting backlog numbers, excluding some long-term orders to maintain a high-quality backlog [50][53] Question: Commodore acquisition impact - The acquisition had a minimal impact on gross margin in the current quarter due to purchase accounting, but margins are expected to improve as inventory is sold through [54][55] Question: SEC complaint status - Management provided an update on the SEC complaint, indicating that they filed a motion to dismiss and are prepared for litigation if necessary [70][71]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended October 2, 2021 OR ☐ 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 (State or other jurisdic ...

Financial Data and Key Metrics Changes - Revenues increased approximately 30% year-over-year, reaching $330.4 million compared to $254.8 million in the prior year's first quarter [7][15] - Diluted EPS was up about 60%, coming in at $2.92 versus $1.80 in the first quarter of 2021 [7][20] - Consolidated gross profit as a percentage of net revenue was 22.4%, up from 21.7% in the same period last year [18] Business Line Data and Key Metrics Changes - In the factory-built housing segment, net revenue increased 31.2% to $312.3 million from $238.1 million in the prior year quarter, driven by an 18.7% increase in average revenue for homes sold [16] - Financial services segment net revenue increased 8.4% to $18.1 million, mainly due to higher loan sales volume and servicing income [17] Market Data and Key Metrics Changes - Backlogs grew to $792 million, representing approximately 40 weeks of production, with 80% of the backlog growth attributed to high demand and 20% due to reduced production over the past five quarters [12][13] Company Strategy and Development Direction - The company announced the acquisition of Commodore Homes for $140 million, which is expected to expand its footprint into the northeast and increase unit shipments by approximately 25% [8] - Investments in existing plants, such as the Fort Worth plant expansion, are aimed at increasing capacity by about 20% [8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in operational execution and noted that demand remains strong, with backlogs providing a positive outlook [13] - The company is addressing persistent labor and supply challenges while focusing on improving retention and building skills [11] Other Important Information - The company completed its first corporate responsibility report, emphasizing accountability and improvement in stakeholder impact [26] - Cash balance increased to $329.8 million from $322.3 million three months earlier, primarily due to net income and changes in working capital [22] Q&A Session Summary Question: Raw material availability and pain points - Management acknowledged ongoing challenges with raw material availability, particularly with inputs manufactured in the U.S. and logistics disruptions for imports [28][29] Question: Update on automation efforts - Management highlighted optimism regarding automation and process improvements, particularly from the Commodore acquisition [30][31] Question: Additional capacity from plants and acquisition - The Commodore acquisition is expected to provide a significant increase in unit production, estimated at a 25% increase [34] Question: Production increase despite supply chain headwinds - Management remains optimistic about increasing production and addressing labor challenges, aiming to surpass pre-pandemic levels [40][41] Question: Impact of ASP increase - The increase in average selling prices was primarily due to pricing adjustments to cover higher input costs, with minimal impact from product mix [41] Question: Timing for closing the Commodore deal - The acquisition is expected to close in the fiscal quarter of the last calendar quarter, pending regulatory filings [46] Question: Backlog pricing and potential margin expansion - Management indicated that lower input costs would lead to margin expansion, as pricing adjustments have been made to the backlog [51] Question: Labor availability and hiring conditions - Management expressed cautious optimism about improving labor availability, citing job fairs and increased wages as factors [53][55] Question: Realistic production goals post-acquisition - Management indicated that achieving production levels around 4,000 homes per quarter is realistic based on historical performance [56][58] Question: Share repurchase authorization - The company has a remaining authorization of approximately $86 million from a $100 million buyback program initiated last October [59]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended July 3, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | --- | --- | --- | |----------------------------------------------------------------|----------------------------------------------------------------------------------------|---------------- ...

Financial Data and Key Metrics Changes - The company reported the highest quarterly net revenue in its history at $306.5 million, up 20.1% from $255.3 million in the prior year's fourth quarter [20] - Net income increased by 110% to $25.2 million compared to $12 million in the same quarter of the prior year, with net income per diluted share rising to $2.71 from $1.29 [32] - Consolidated gross profit as a percentage of net revenue was 23.1%, up from 20.3% in the same period last year [24] Business Line Data and Key Metrics Changes - In the factory-built housing segment, net revenue increased 19.6% to $288 million from $240.8 million in the prior year quarter, driven by a 13.8% increase in average revenue per home sold [21] - Units sold increased by 5.2%, contributing approximately $19.1 million to revenue [22] - In the financial services segment, net revenue rose 26.7% to $18.5 million from $14.6 million, primarily due to market gains on equity securities [23] Market Data and Key Metrics Changes - Backlogs grew by $131 million to $603 million, equating to approximately 32 to 34 weeks of production [11] - Order rates were up 50% over last year's fourth quarter and 40% for the year, accounting for about 85% of the backlog growth [11] - The homebuilding industry is still not meeting the level of new unit starts needed to balance household formations, indicating a significant demand for affordable housing [17] Company Strategy and Development Direction - The company is focused on investing in plants, seeking acquisitions, and new growth opportunities, including the development of a new park model facility in Glendale, Arizona [18] - The strategy includes improving productivity and workplace conditions, as well as training and career programs to enhance retention and skills [19] - The company is confident in future demand and is actively looking for opportunities to expand geographically, particularly in the Northeast [52] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing challenges with supply chain disruptions and labor availability but expressed optimism about maintaining throughput and efficiency [44][50] - The company is committed to addressing the backlog and providing more affordable housing, loans, and insurance coverage [78] - Management noted that while there are cycles driven by interest rates, the need for affordable housing remains significant [17] Other Important Information - The company faced increased costs due to supply chain issues, with certain materials like oriented strand board rising by 275% over the past year [12] - Selling, general, and administrative expenses increased to $44 million, or 14.3% of net revenue, compared to $37.4 million, or 14.7% of net revenue, in the same quarter last year [27] - The company accrued $1.4 million in expenses related to an SEC inquiry, which is considered financially immaterial to overall results [28][39] Q&A Session Summary Question: Revenue and gross margin benefit from the additional week year-over-year - Management indicated they would provide estimates later [41][42] Question: Expectations for shipments in fiscal Q1 relative to Q4 - Management noted ongoing supply chain disruptions but aimed to increase capacity utilization to pre-pandemic levels [44][45] Question: Incremental demand from trading down versus site-built homes - Management observed anecdotal evidence of increased demand for manufactured homes due to rising housing costs [48] Question: Labor availability and absenteeism improvements - Management expressed cautious optimism about improvements in labor availability as the economy recovers [50] Question: Updates on the CFO search - The search is ongoing, and management is actively working to fill the position [75]

Part I [Business](index=4&type=section&id=Item%201.%20Business) The company is a leading U.S. producer of factory-built homes with integrated financial services operations - Cavco is one of the largest producers of manufactured homes in the United States, operating **20 homebuilding production lines** and distributing through **40 company-owned retail stores** and a network of independent dealers[12](index=12&type=chunk)[13](index=13&type=chunk) - The company operates two primary business segments: **Factory-built Housing** and **Financial Services**, which includes mortgage financing (CountryPlace) and property/casualty insurance (Standard Casualty)[12](index=12&type=chunk)[14](index=14&type=chunk)[15](index=15&type=chunk) - The COVID-19 pandemic led to strong home sales order rates, increasing the home order backlog from **$124 million to approximately $603 million** at the end of fiscal year 2021[19](index=19&type=chunk) Factory-Built Homes Sold | Fiscal Year | Homes Sold | | :--- | :--- | | 2021 | 14,214 | | 2020 | 15,100 | | 2019 | 14,389 | [Products](index=6&type=section&id=Products) The company produces a diverse range of factory-built structures including HUD code, modular, and park model homes - Products include HUD code manufactured homes, park model RVs, modular homes (single and multi-section), and commercial structures like apartment buildings and hotels[28](index=28&type=chunk) - Residential homes range from approximately **500 to 3,300 square feet**, with extensive customization options available, including eco-friendly features like bamboo flooring and solar power[29](index=29&type=chunk)[30](index=30&type=chunk)[32](index=32&type=chunk) [Factory-built Housing Segment](index=7&type=section&id=Factory-built%20Housing%20Segment) This segment operates 20 manufacturing facilities and saw its sales order backlog surge to $603 million - The company operates **20 homebuilding production lines** across the United States, with a typical manufacturing facility serving a 350-mile radius[36](index=36&type=chunk)[37](index=37&type=chunk) - Distribution channels include **40 Company-owned retail stores**, with a heavy concentration of 32 stores in Texas, and a network of independent distributors across 43 states and Canada[13](index=13&type=chunk)[40](index=40&type=chunk) Sales Order Backlog | Date | Backlog (in millions) | | :--- | :--- | | April 3, 2021 | $603 | | March 28, 2020 | $124 | [Financial Services Segment](index=8&type=section&id=Financial%20Services%20Segment) This segment provides mortgage financing and property and casualty insurance for manufactured home buyers - CountryPlace originates and services various home loans and is an approved seller/servicer for **Fannie Mae, Freddie Mac, and a Ginnie Mae issuer**[46](index=46&type=chunk) - The loan portfolio is geographically concentrated, with the largest concentrations in **Texas, Florida, Arizona, Oklahoma, and New Mexico**[47](index=47&type=chunk) - Standard Casualty provides property and casualty insurance for manufactured homes, primarily in **Texas, Arizona, New Mexico, and Nevada**[52](index=52&type=chunk) [Competition](index=11&type=section&id=Competition) The company faces significant competition in manufacturing, financing, and insurance from larger entities - The manufactured housing industry is highly competitive, with key competitors including **Clayton Homes, Inc** and **Skyline Champion Corporation**[64](index=64&type=chunk)[65](index=65&type=chunk) - Financial services competitors include **21st Mortgage Corporation**, Triad Financial Services, Inc, and Cascade Financial Services[66](index=66&type=chunk) - Insurance competitors include **National Lloyds** and **American Modern Insurance**, which may be larger and offer broader insurance types[67](index=67&type=chunk) [Government Regulation](index=12&type=section&id=Government%20Regulation) Operations are subject to extensive regulation from HUD, CFPB, and state agencies, including pandemic-related acts - Manufactured home construction is governed by the National Manufactured Housing Construction and Safety Standards Act of 1974, with regulations established by **HUD**[69](index=69&type=chunk) - Financing operations are subject to numerous regulations, including the **Dodd-Frank Act, TILA, RESPA**, and rules from the Consumer Financial Protection Bureau (CFPB)[74](index=74&type=chunk)[75](index=75&type=chunk) - The **CARES Act** granted forbearance rights and foreclosure protection to borrowers with federally backed mortgage loans experiencing hardship due to the COVID-19 pandemic, impacting servicing operations[88](index=88&type=chunk) [Risk Factors](index=18&type=section&id=Item%201A.%20Risk%20Factors) The company faces risks from the COVID-19 pandemic, supply chain disruptions, economic cyclicality, and an SEC investigation [Business and Operational Risks](index=18&type=section&id=Business%20and%20Operational%20Risks) Key operational risks include pandemic impacts, labor shortages, material costs, and contingent repurchase obligations - The **COVID-19 pandemic** poses significant risks by constraining operations, reducing factory capacity utilization, increasing employee absenteeism, and disrupting the supply chain[105](index=105&type=chunk)[106](index=106&type=chunk) - The company faces risks from **labor shortages** and the pricing and availability of key raw materials like wood, steel, and gypsum wallboard, which can increase costs and cause production delays[109](index=109&type=chunk)[110](index=110&type=chunk) - Contingent repurchase obligations related to wholesale financing for distributors amounted to a maximum of approximately **$74.2 million** as of April 3, 2021[126](index=126&type=chunk) [Industry and Economic Risks](index=23&type=section&id=Industry%20and%20Economic%20Risks) The business is subject to risks from tightened credit, limited financing, and the cyclical nature of the housing market - **Tightened credit standards**, a limited number of home-only lenders, and increased government regulation constrain the consumer financing market, which can restrict home sales[134](index=134&type=chunk)[135](index=135&type=chunk) - The manufactured housing industry is **highly cyclical and seasonal**, influenced by economic factors such as employment levels, interest rates, and consumer confidence[141](index=141&type=chunk) - The industry is **highly competitive**, with numerous companies producing manufactured homes and competition from other forms of low-cost housing like site-built homes and apartments[142](index=142&type=chunk) [Legal and Regulatory Risks](index=25&type=section&id=Legal%20and%20Regulatory%20Risks) The company faces risks from restrictive zoning ordinances and an ongoing SEC investigation into its former CEO - The business is subject to **local zoning ordinances**, which can restrict the placement of manufactured homes and adversely affect revenue[145](index=145&type=chunk) - The company has been cooperating with an **SEC investigation** since 2018 regarding trading directed by its former CEO, which could lead to penalties and other adverse consequences[147](index=147&type=chunk)[148](index=148&type=chunk) [Properties](index=27&type=section&id=Item%202.%20Properties) The company owns or leases numerous manufacturing, supply, and administrative facilities across the United States - The company owns the land for most of its manufacturing facilities, with a notable exception being the Goodyear, Arizona plant, which is leased[160](index=160&type=chunk) Core Property Overview | Property Type | Count | Primary Ownership Status | | :--- | :--- | :--- | | Active Manufacturing Facilities | 19 | Owned | | Component and Supply Facilities | 2 | 1 Owned, 1 Leased | | Inactive Manufacturing Facilities | 3 | 2 Owned, 1 Leased | | Administrative Locations | 3 | 1 Owned, 2 Leased | [Legal Proceedings](index=28&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in an ongoing SEC investigation and recently settled two class-action lawsuits - The company is cooperating with an **SEC investigation** initiated in 2018 regarding securities trading directed by the former CEO; in November 2020, the SEC staff issued a Wells Notice to Cavco, indicating a potential enforcement action[467](index=467&type=chunk)[468](index=468&type=chunk) - Two class-action lawsuits alleging **wage-and-hour violations** were settled during the fourth quarter of fiscal year 2021[470](index=470&type=chunk) [Mine Safety Disclosures](index=28&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company's operations - Not applicable[162](index=162&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=29&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's stock trades on Nasdaq, and a $100 million share repurchase program was approved in October 2020 - The company's common stock is traded on the **Nasdaq Global Select Market** under the symbol **CVCO**[165](index=165&type=chunk) - A **$100 million stock repurchase program** was approved on October 27, 2020, replacing a previous $10 million authorization[167](index=167&type=chunk) Share Repurchase Activity (Q4 FY 2021) | Period | Shares Purchased | Average Price Paid Per Share | Dollar Value Remaining Under Program (in thousands) | | :--- | :--- | :--- | :--- | | Feb 28, 2021 to Apr 3, 2021 | 6,600 | $218.37 | $98,559 | [Selected Financial Data](index=31&type=section&id=Item%206.%20Selected%20Financial%20Data) This section presents a five-year summary of key financial metrics, showing consistent revenue and asset growth Selected Financial Data (Fiscal Years 2017-2021) | ($ in thousands, except per share) | April 3, 2021 | March 28, 2020 | March 30, 2019 | March 31, 2018 | April 1, 2017 | | :--- | :--- | :--- | :--- | :--- | :--- | | **Net revenue** | $1,108,051 | $1,061,774 | $962,746 | $871,235 | $773,797 | | **Net income** | $76,646 | $75,066 | $68,622 | $61,502 | $37,955 | | **Diluted EPS** | $8.25 | $8.10 | $7.40 | $6.68 | $4.17 | | **Total assets** | $951,833 | $810,431 | $725,216 | $674,780 | $607,316 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=32&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial results, highlighting revenue growth driven by higher prices and a significant order backlog [Company Outlook](index=33&type=section&id=Company%20Outlook) The outlook is positive due to a strong order backlog, though challenged by labor and supply chain disruptions - The backlog of home sales orders increased dramatically to **$603 million** as of April 3, 2021, up from $124 million a year prior[190](index=190&type=chunk) - Factory capacity utilization was approximately **75% in Q4 2021**, below pre-pandemic levels of over 80%, due to employee absenteeism and supply shortages[191](index=191&type=chunk) - The company is working with industry associations and GSEs to expand the secondary market for home-only loans through the **"Duty to Serve" initiatives**, which could increase housing demand[199](index=199&type=chunk) [Results of Operations](index=35&type=section&id=Results%20of%20Operations) Fiscal 2021 net revenue grew 4.4% to $1.11 billion, driven by higher home selling prices despite fewer homes sold Net Revenue by Segment (FY 2021 vs. FY 2020) | ($ in thousands) | April 3, 2021 | March 28, 2020 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Factory-built housing | $1,037,889 | $999,340 | $38,549 | 3.9% | | Financial services | $70,162 | $62,434 | $7,728 | 12.4% | | **Total** | **$1,108,051** | **$1,061,774** | **$46,277** | **4.4%** | Gross Profit by Segment (FY 2021 vs. FY 2020) | ($ in thousands) | April 3, 2021 | March 28, 2020 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Factory-built housing | $199,604 | $195,244 | $4,360 | 2.2% | | Financial services | $39,373 | $35,274 | $4,099 | 11.6% | | **Total** | **$238,977** | **$230,518** | **$8,459** | **3.7%** | Income Before Income Taxes by Segment (FY 2021 vs. FY 2020) | ($ in thousands) | April 3, 2021 | March 28, 2020 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Factory-built housing | $78,937 | $78,531 | $406 | 0.5% | | Financial services | $17,975 | $14,448 | $3,527 | 24.4% | | **Total** | **$96,912** | **$92,979** | **$3,933** | **4.2%** | [Liquidity and Capital Resources](index=37&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with cash increasing by $83.7 million, supported by $114.0 million in operating cash flow Summary of Cash Flows (FY 2021 vs. FY 2020) | ($ in thousands) | April 3, 2021 | March 28, 2020 | Change | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | $114,031 | $101,737 | $12,294 | | Net cash used in investing activities | ($23,349) | ($25,243) | $1,894 | | Net cash used in financing activities | ($6,982) | ($20,756) | $13,774 | | **Net increase in cash** | **$83,700** | **$55,738** | **$27,962** | Contractual Obligations as of April 3, 2021 | ($ in thousands) | Total | Less than 1 Year | 1-3 Years | 3-5 Years | After 5 Years | | :--- | :--- | :--- | :--- | :--- | :--- | | Debt obligations | $14,580 | $2,313 | $3,655 | $3,112 | $5,500 | | Operating lease obligations | $19,776 | $4,292 | $7,564 | $5,654 | $2,266 | | Finance lease obligations | $341 | $73 | $146 | $122 | — | | **Total** | **$34,697** | **$6,678** | **$11,365** | **$8,888** | **$7,766** | [Quantitative and Qualitative Disclosures about Market Risk](index=42&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company's primary market risk exposure is to interest rate changes affecting housing demand and loan values - The company's primary market risk is **interest rate sensitivity**, as higher rates can adversely affect housing demand and the ability of customers to obtain financing[253](index=253&type=chunk)[254](index=254&type=chunk) - As of April 3, 2021, the company had outstanding interest rate lock commitments (IRLCs) with a notional amount of **$37.7 million**, which are subject to interest rate and fallout risk[258](index=258&type=chunk) Interest Rate Sensitivity Analysis (Impact of 1% Unfavorable Change) | ($ in thousands) | Reduction in Fair Value | | :--- | :--- | | Consumer loans receivable | $3,317 | | Commercial loans receivable | $344 | | Securitized financings | $462 | [Financial Statements and Supplementary Data](index=43&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section references the company's audited consolidated financial statements and related notes beginning on page F-1 - This item references the full Consolidated Financial Statements and related notes, which are included at the end of the 10-K report, starting on page F-1[259](index=259&type=chunk) [Controls and Procedures](index=43&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and internal control over financial reporting were effective - Management, including the CEO and Chief Accounting Officer, concluded that the company's **disclosure controls and procedures were effective** as of the fiscal year-end, April 3, 2021[260](index=260&type=chunk) - Management concluded that the company's **internal control over financial reporting was effective** as of April 3, 2021, based on the COSO 2013 framework[264](index=264&type=chunk) - The independent auditor, RSM US LLP, issued an **unqualified opinion** on the effectiveness of the company's internal control over financial reporting[265](index=265&type=chunk)[269](index=269&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=47&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information regarding directors, officers, and governance is incorporated by reference from the 2021 Proxy Statement - Information is incorporated by reference from the 2021 Proxy Statement[277](index=277&type=chunk) [Executive Compensation](index=47&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive compensation is incorporated by reference from the 2021 Proxy Statement - Information is incorporated by reference from the 2021 Proxy Statement[279](index=279&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=47&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information on security ownership and equity plans is incorporated by reference from the 2021 Proxy Statement - Information is incorporated by reference from the 2021 Proxy Statement[279](index=279&type=chunk) Equity Compensation Plan Information (as of April 3, 2021) | Plan Category | Securities to be Issued Upon Exercise | Weighted-Average Exercise Price | Securities Remaining for Future Issuance | | :--- | :--- | :--- | :--- | | Equity compensation plans approved by stockholders | 251,749 | $146.86 | 295,571 | [Certain Relationships and Related Transactions, and Director Independence](index=48&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on related party transactions is incorporated by reference from the 2021 Proxy Statement - Information is incorporated by reference from the 2021 Proxy Statement[283](index=283&type=chunk) [Principal Accounting Fees and Services](index=48&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information regarding accounting fees and services is incorporated by reference from the 2021 Proxy Statement - Information is incorporated by reference from the 2021 Proxy Statement[284](index=284&type=chunk) Part IV [Exhibits, Financial Statement Schedules](index=49&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists the financial statements and exhibits filed with the report, with schedules omitted as inapplicable - The Financial Statements are listed in the Index to Consolidated Financial Statements on page F-1 of the report[287](index=287&type=chunk) - All financial statement schedules have been omitted because they are not applicable or the required information is included in the Consolidated Financial Statements or Notes thereto[287](index=287&type=chunk) Financial Statements [Report of Independent Registered Public Accounting Firm](index=53&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) The auditor issued unqualified opinions on the financial statements and internal controls, citing insurance reserves as a Critical Audit Matter - The auditor issued an **unqualified opinion**, stating the financial statements present fairly, in all material respects, the financial position of the Company[302](index=302&type=chunk) - The auditor also issued an **unqualified opinion** on the effectiveness of the Company's internal control over financial reporting as of April 3, 2021[303](index=303&type=chunk) - The estimation of the **Reserve for Property Casualty Insurance Claims** was identified as a Critical Audit Matter, requiring a high degree of auditor judgment[306](index=306&type=chunk)[308](index=308&type=chunk)[309](index=309&type=chunk) [Consolidated Financial Statements](index=55&type=section&id=Consolidated%20Financial%20Statements) The financial statements show total assets of $951.8 million and net income of $76.6 million for fiscal 2021 Consolidated Balance Sheet Summary (as of April 3, 2021) | ($ in thousands) | April 3, 2021 | March 28, 2020 | | :--- | :--- | :--- | | Total current assets | $651,799 | $516,185 | | **Total assets** | **$951,833** | **$810,431** | | Total current liabilities | $237,104 | $172,102 | | **Total liabilities** | **$268,193** | **$202,845** | | **Total stockholders' equity** | **$683,640** | **$607,586** | Consolidated Income Statement Summary (Year Ended April 3, 2021) | ($ in thousands) | FY 2021 | FY 2020 | | :--- | :--- | :--- | | Net revenue | $1,108,051 | $1,061,774 | | Gross profit | $238,977 | $230,518 | | Income from operations | $88,825 | $84,907 | | **Net income** | **$76,646** | **$75,066** | [Notes to Consolidated Financial Statements](index=59&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes provide detailed disclosures on accounting policies, segment performance, and legal contingencies - Note 6 details the consumer loan portfolio, which totaled **$74.8 million (net)** as of April 3, 2021, with geographic concentrations in Texas (35%) and Florida (20%)[405](index=405&type=chunk)[409](index=409&type=chunk) - Note 10 indicates that all of the company's **$75.1 million in goodwill** is attributable to the factory-built housing segment[361](index=361&type=chunk)[434](index=434&type=chunk) - Note 16 discloses contingent repurchase obligations with a maximum liability of approximately **$74.2 million** and details the ongoing SEC investigation[457](index=457&type=chunk)[458](index=458&type=chunk)[467](index=467&type=chunk) Segment Information Summary (FY 2021) | ($ in thousands) | Factory-built Housing | Financial Services | Total | | :--- | :--- | :--- | :--- | | **Net Revenue** | $1,037,889 | $70,162 | $1,108,051 | | **Income before taxes** | $78,937 | $17,975 | $96,912 | | **Total Assets (as of 4/3/21)** | $711,579 | $240,254 | $951,833 |

Cavco Industries, Inc. (NASDAQ:CVCO) Q3 2021 Earnings Conference Call January 29, 2021 1:00 PM ET Company Participants Mark Fusler - IR Bill Boor - CEO Paul Bigbee - CAO Conference Call Participants Daniel Moore - CJS Securities Greg Palm - Craig-Hallum Capital Jay McCanless - Wedbush Securities Inc Operator Ladies and gentlemen, thank you for standing by, and welcome to the Third Quarter Fiscal Year 2021 Cavco Industries Inc Earnings Conference Call and Webcast. At this time, all participants are in a lis ...