Cavco(CVCO) - 2024 Q3 - Quarterly Report

Part I Financial Information This section presents the company's financial statements, management's analysis, market risks, and internal controls Financial Statements This section presents the unaudited consolidated financial statements and notes, showing a revenue and net income decrease Consolidated Balance Sheets Balance Sheet Highlights (as of December 30, 2023 vs. April 1, 2023) | Account | Dec 30, 2023 ($ in thousands) | April 1, 2023 ($ in thousands) | | :--- | :--- | :--- | | Cash and cash equivalents | $352,808 | $271,427 | | Total current assets | $833,047 | $804,579 | | Total assets | $1,326,596 | $1,307,975 | | Total current liabilities | $271,172 | $293,391 | | Total stockholders' equity | $1,008,700 | $976,286 | Consolidated Statements of Comprehensive Income Income Statement Summary (Unaudited, $ in thousands) | Metric | Three Months Ended Dec 30, 2023 | Three Months Ended Dec 31, 2022 | Nine Months Ended Dec 30, 2023 | Nine Months Ended Dec 31, 2022 | | :--- | :--- | :--- | :--- | :--- | | Net Revenue | $446,769 | $500,603 | $1,374,674 | $1,666,333 | | Gross Profit | $103,051 | $131,968 | $327,887 | $434,291 | | Income from Operations | $39,739 | $73,064 | $141,389 | $242,357 | | Net Income | $35,987 | $59,589 | $123,971 | $193,481 | | Diluted EPS | $4.27 | $6.66 | $14.34 | $21.55 | Consolidated Statements of Cash Flows Cash Flow Summary (Nine Months Ended) | Cash Flow Activity | Dec 30, 2023 ($ in thousands) | Dec 31, 2022 ($ in thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $206,104 | $230,119 | | Net cash used in investing activities | ($26,543) | ($29,199) | | Net cash used in financing activities | ($96,443) | ($73,860) | | Net increase in cash | $83,118 | $127,060 | Notes to Consolidated Financial Statements These notes detail the company's operating segments, revenue disaggregation, recent acquisitions, goodwill adjustments, and stock repurchase activities - The company operates in two segments: (1) factory-built housing and (2) financial services, which includes consumer finance and insurance[17] Net Revenue by Segment (Nine Months Ended) | Segment | Dec 30, 2023 ($ in thousands) | Dec 31, 2022 ($ in thousands) | | :--- | :--- | :--- | | Factory-built housing | $1,318,114 | $1,613,392 | | Financial services | $56,560 | $52,941 | | Total | $1,374,674 | $1,666,333 | - On January 3, 2023, the company acquired Solitaire Homes for $110.8 million. On November 15, 2023, it acquired Kentucky Dream Homes for $23.8 million[65][68] - Goodwill increased from $114.5 million to $120.7 million during the nine months ended December 30, 2023, primarily due to the acquisition of Kentucky Dream Homes ($4.6M) and adjustments related to the Solitaire acquisition ($1.1M)[41] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial performance, highlighting Q3 revenue decrease and the company's strong liquidity Company and Industry Outlook - Industry-wide home shipments decreased by 22.2% for the calendar year through November 2023 compared to the prior year, reflecting tempered demand from higher interest rates and inflation[75] - The company's order backlog was $160 million at December 30, 2023, a significant decrease from $427 million at December 31, 2022[82] - The company maintains a strong balance sheet and conservative cost structure to navigate market challenges and act on opportunities[78] Results of Operations Q3 FY2024 vs Q3 FY2023 Performance | Metric | Q3 2024 ($ in thousands) | Q3 2023 ($ in thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Net Revenue | | | | | Factory-built housing | $426,939 | $481,193 | (11.3)% | | Financial services | $19,830 | $19,410 | 2.2% | | Gross Profit | | | | | Factory-built housing | $95,756 | $122,923 | (22.1)% | | Financial services | $7,295 | $9,045 | (19.3)% | - The decrease in factory-built housing revenue was due to a 6.3% decrease in homes sold and a 5.3% decrease in net revenue per home sold[85] - Selling, general and administrative (SG&A) expenses increased by 7.5% for the quarter, primarily due to higher legal expenses and costs from the Solitaire acquisition[91] - Interest income increased by 46.2% in Q3 YoY to $5.2 million, mainly due to higher interest rates on cash balances[93] Liquidity and Capital Resources - The company believes its cash and cash equivalents of $352.8 million, along with operating cash flow, are sufficient to fund operations and growth for the next 12 months[95][10] - Net cash from operating activities for the nine months ended Dec 30, 2023, was $206.1 million, a decrease from $230.1 million in the prior-year period, primarily due to lower net income[97] - The company has a $50.0 million Revolving Credit Facility with no outstanding balance as of December 30, 2023[95] - Net cash used in financing activities was primarily for the repurchase of common stock, totaling $96.8 million for the nine months ended Dec 30, 2023[101][14] Quantitative and Qualitative Disclosures About Market Risk The company reports no material changes to its market risk disclosures from the previously filed 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[103] Controls and Procedures Management concluded disclosure controls were effective, with no material changes to internal control over financial reporting - The company's President and CEO and its CFO concluded that disclosure controls and procedures were effective as of December 30, 2023[105] - No change in the company's internal control over financial reporting occurred during the quarter that has materially affected, or is reasonably likely to materially affect, these controls[106] Part II Other Information This section covers legal proceedings, risk factors, equity sales, and other corporate information Legal Proceedings The company reports pending lawsuits are not expected to materially affect its financial position - The company is party to certain lawsuits in the ordinary course of business but does not believe they will have a material adverse effect on its consolidated financial position, liquidity, or results of operations[56][109] Risk Factors The company refers to its Form 10-K for risk factors, with no new risks identified in this filing - The report refers to the Risk Factors section in the previously filed Form 10-K for a discussion of potential risks, with no new risk factors added in this filing[110] Unregistered Sales of Equity Securities and Use of Proceeds The company details Q3 FY2024 stock repurchases and a new $100 million repurchase program Q3 FY2024 Stock Repurchase Activity | Period | Total Shares Purchased | Average Price Paid Per Share ($) | | :--- | :--- | :--- | | October 1, 2023 to November 4, 2023 | 190,593 | $262.34 | | Total Q3 | 190,593 | $262.34 | - On August 3, 2023, the Board approved a $100 million stock repurchase program. On February 1, 2024, the Board approved another $100 million program[111] Other Information This section reports a key executive's resignation and details amendments to the company's bylaws - Mickey R. Dragash, Executive Vice President, General Counsel, Corporate Secretary & Chief Compliance Officer, resigned effective February 12, 2024[114] - On January 30, 2024, the Board approved the Fourth Amended and Restated Bylaws, which revise provisions related to stockholder meetings, director nominations to align with universal proxy rules, and director/officer indemnification[115][119] Exhibits This section lists the exhibits filed with the Form 10-Q, including amended bylaws and officer certifications - Filed exhibits include the Fourth Amended and Restated Bylaws, CEO and CFO certifications (Sections 302 and 906), and Inline XBRL documents[118]