cvco-20240629

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 June 29, 2024


☐			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 jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification No.)

3636 North Central Ave, Ste 1200

Phoenix

Arizona

85012

(Address of principal executive offices, including zip code)

(602) 256-6263

(Registrant's telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01	CVCO	The Nasdaq Stock Market LLC
		(Nasdaq Global Select Market)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large Accelerated Filer	☒	Accelerated Filer	☐
Non-accelerated Filer	☐	Smaller Reporting Company	☐
		Emerging Growth Company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of July 25, 2024, 8,253,272 shares of the registrant's Common Stock, $0.01 par value, were outstanding.

CAVCO INDUSTRIES, INC.

FORM 10-Q

June 29, 2024

TABLE OF CONTENTS


			Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of June 29, 2024 (unaudited) and March 30, 2024			1
Consolidated Statements of Comprehensive Income (unaudited) for the three months ended June 29, 2024 and July 1, 2023			2
Consolidated Statements of Cash Flows (unaudited) for the three months ended June 29, 2024 and July 1, 2023			3
Notes to Consolidated Financial Statements (unaudited)			4
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			16
Item 3. Quantitative and Qualitative Disclosures About Market Risk			21
Item 4. Controls and Procedures			22
PART II. OTHER INFORMATION
Item 1. Legal Proceedings			23
Item 1A. Risk Factors			23
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			23
Item 3. Not applicable
Item 4. Not applicable
Item 5. Other Information			24
Item 6. Exhibits			24
SIGNATURES			25

Table of Contents

PART 1. FINANCIAL INFORMATION

Item 1. Financial Statements

CAVCO INDUSTRIES, INC.

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per share amounts)


	June 29, 2024		March 30, 2024
ASSETS	(Unaudited)
Current assets
Cash and cash equivalents	$	359,296	$	352,687
Restricted cash, current	19,056		15,481
Accounts receivable, net	85,051		77,123
Short-term investments	20,671		18,270
Current portion of consumer loans receivable, net	28,887		20,713
Current portion of commercial loans receivable, net	40,363		40,787
Current portion of commercial loans receivable from affiliates, net	1,784		2,529
Inventories	244,844		241,339
Prepaid expenses and other current assets	77,622		82,870
Total current assets	877,574		851,799
Restricted cash	585		585
Investments	14,916		17,316
Consumer loans receivable, net	22,151		23,354
Commercial loans receivable, net	50,918		45,660
Commercial loans receivable from affiliates, net	2,279		2,065
Property, plant and equipment, net	224,749		224,199
Goodwill	121,969		121,934
Other intangibles, net	27,829		28,221
Operating lease right-of-use assets	37,712		39,027
Total assets	$	1,380,682	$	1,354,160
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable	$	31,431	$	33,531
Accrued expenses and other current liabilities	264,574		239,736
Total current liabilities	296,005		273,267
Operating lease liabilities	33,873		35,148
Other liabilities	7,666		7,759
Deferred income taxes	4,598		4,575

Stockholders' equity
Preferred stock, $0.01 par value; 1,000,000 shares authorized; No shares issued or outstanding	—		—
Common stock, $0.01 par value; 40,000,000 shares authorized; Issued 9,401,057 and 9,389,953 shares, respectively; Outstanding 8,251,522 and 8,320,718 shares, respectively	94		94
Treasury stock, at cost; 1,149,535 and 1,069,235 shares, respectively	(303,897)		(274,693)
Additional paid-in capital	281,062		281,216
Retained earnings	1,061,556		1,027,127
Accumulated other comprehensive loss	(275)		(333)
Total stockholders' equity	1,038,540		1,033,411
Total liabilities and stockholders' equity	$	1,380,682	$	1,354,160

See accompanying Notes to Consolidated Financial Statements

Table of Contents

CAVCO INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Dollars in thousands, except per share amounts)

(Unaudited)


	Three Months Ended
		June 29, 2024		July 1, 2023
Net revenue		$	477,599	$	475,875
Cost of sales		374,197		357,996
Gross profit		103,402		117,879
Selling, general and administrative expenses		64,851		61,680
Income from operations		38,551		56,199
Interest income		5,511		4,618
Interest expense		(90)		(266)
Other (expense) income, net		(111)		126
Income before income taxes		43,861		60,677
Income tax expense		(9,432)		(14,266)
Net income		34,429		46,411
Less: net income attributable to redeemable noncontrolling interest		—		54
Net income attributable to Cavco common stockholders		$	34,429	$	46,357

Comprehensive income
Net income		$	34,429	$	46,411
Reclassification adjustment for securities sold		9		3
Applicable income tax (expense)		(2)		(1)
Net change in unrealized position of investments held		65		(56)
Applicable income tax (expense) benefit		(14)		12
Comprehensive income		34,487		46,369
Less: comprehensive income attributable to redeemable noncontrolling interest		—		54
Comprehensive income attributable to Cavco common stockholders		$	34,487	$	46,315

Net income per share attributable to Cavco common stockholders
Basic		$	4.15	$	5.35
Diluted		$	4.11	$	5.29
Weighted average shares outstanding
Basic		8,286,476		8,670,434
Diluted		8,372,254		8,758,080

See accompanying Notes to Consolidated Financial Statements

Table of Contents

CAVCO INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)


	Three Months Ended
	June 29, 2024		July 1, 2023
OPERATING ACTIVITIES
Net income	$	34,429	$	46,411
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	4,761		4,566
Provision for credit losses	89		19
Deferred income taxes	7		(1,868)
Stock-based compensation expense	2,195		1,438
Non-cash interest income, net	(286)		(297)
Loss on sale or retirement of property, plant and equipment, net	11		190
Gain on investments and sale of loans, net	(177)		(3,165)

Changes in operating assets and liabilities, net of acquisitions
Accounts receivable	(7,977)		3,692
Consumer loans receivable originated	(20,833)		(36,737)
Proceeds from sales of consumer loans receivable	1,582		42,363
Principal payments received on consumer loans receivable	12,922		1,819
Inventories	(3,505)		9,110
Prepaid expenses and other current assets	5,648		15,151
Commercial loans receivable originated	(26,750)		(28,726)
Principal payments received on commercial loans receivable	22,356		25,216
Accounts payable, accrued expenses and other liabilities	22,921		3,111
Net cash provided by operating activities	47,393		82,293
INVESTING ACTIVITIES
Purchases of property, plant and equipment	(4,975)		(4,183)

Proceeds from sale of property, plant and equipment	10		4,434
Purchases of investments	(4,547)		(1,710)
Proceeds from sale of investments	4,163		3,545

Net cash (used in) provided by investing activities	(5,349)		2,086
FINANCING ACTIVITIES
Payments for taxes on stock option exercises and releases of equity awards	(2,349)		(1,363)
Proceeds from exercise of stock options	—		150

Payments on finance leases and other secured financings	(51)		(157)
Payments for common stock repurchases	(29,463)		—
Distributions to noncontrolling interest	—		(120)
Net cash used in financing activities	(31,863)		(1,490)
Net increase in cash, cash equivalents and restricted cash	10,181		82,889
Cash, cash equivalents and restricted cash at beginning of the fiscal year	368,753		283,490
Cash, cash equivalents and restricted cash at end of the period	$	378,937	$	366,379
Supplemental disclosures of cash flow information
Cash paid for income taxes	$	4,720	$	8,123
Cash paid for interest	$	22	$	185
Supplemental disclosures of noncash activity
Change in GNMA loans eligible for repurchase	$	76	$	(1,873)
Right-of-use assets recognized and operating lease obligations incurred	$	1,315	$	687

See accompanying Notes to Consolidated Financial Statements

Table of Contents

CAVCO INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. Basis of Presentation

The accompanying unaudited Consolidated Financial Statements of Cavco Industries, Inc. and its subsidiaries (collectively, "we," "us," "our," the "Company" or "Cavco") have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC") for Quarterly Reports on Form 10-Q and Article 10 of SEC Regulation S-X. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles ("GAAP") have been condensed or omitted pursuant to such rules and regulations. In addition, references throughout to numbered "Notes" refer to these Notes to Consolidated Financial Statements (Unaudited), unless otherwise stated.

In the opinion of management, these financial statements include all adjustments, including normal recurring adjustments, which are necessary to fairly state the interim results for the periods presented. We have evaluated subsequent events after the balance sheet date through the date of the filing of this report with the SEC, and there were no disclosable subsequent events. These Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and the Notes to the Consolidated Financial Statements included in our 2024 Annual Report on Form 10-K for the year ended March 30, 2024, filed with the SEC ("Form 10-K").

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and accompanying Notes. Due to uncertainties, actual results could differ from the estimates and assumptions used in preparation of the Consolidated Financial Statements. The Consolidated Statements of Comprehensive Income and Consolidated Statements of Cash Flows for the interim periods are not necessarily indicative of the results or cash flows for the full year. The Company operates on a 52-53 week fiscal year ending on the Saturday nearest to March 31st of each year. Each fiscal quarter consists of 13 weeks, with an occasional fourth quarter extending to 14 weeks, if necessary, for the fiscal year to end on the Saturday nearest to March 31st. The current fiscal year will end on March 29, 2025 and will include 52 weeks.

For a description of significant accounting policies we used in the preparation of our Consolidated Financial Statements, please refer to Note 1 of the Notes to Consolidated Financial Statements included in the Form 10-K.

2. Recent Accounting Pronouncements

The Company considers the applicability and impact of all Accounting Standards Updates ("ASUs") issued by the Financial Accounting Standards Board ("FASB"). ASUs not listed below were assessed and determined to be either not applicable or are expected to have minimal impact on the Company's Consolidated Financial Statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Taxes Disclosures, which requires greater disaggregation of income tax disclosures. The new standard requires additional information to be disclosed with respect to the income tax rate reconciliation and income taxes paid disaggregated by jurisdiction. This ASU should be applied prospectively for fiscal years beginning after December 15, 2024, with retrospective application permitted. The Company is currently evaluating the impacts of this guidance on the Company’s Consolidated Financial Statements.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires companies to enhance the disclosures about segment expenses. The new standard requires the disclosure of the Company’s Chief Operating Decision Maker ("CODM"), expanded incremental line-item disclosures of significant segment expenses used by the CODM for decision-making, and the inclusion of previous annual only segment disclosure requirements on a quarterly basis. This ASU should be applied retrospectively for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the impacts of this guidance on the Company’s Consolidated Financial Statements.

Table of Contents

3. Revenue from Contracts with Customers

The following table summarizes Net revenue disaggregated by reportable segment and source (in thousands):


	Three Months Ended
		June 29, 2024		July 1, 2023
Factory-built housing
Home sales		$	436,429	$	439,744
Delivery, setup and other revenues		21,619		17,365
		458,048		457,109
Financial services
Insurance agency commissions received from third-party insurance companies		1,406		899
All other sources		18,145		17,867
		19,551		18,766
		$	477,599	$	475,875

4. Investments

Investments consisted of the following (in thousands):


	June 29, 2024		March 30, 2024
Available-for-sale debt securities	$	20,025	$	18,669
Marketable equity securities	10,628		11,961
Non-marketable equity investments	4,934		4,956
	35,587		35,586
Less short-term investments	(20,671)		(18,270)
	$	14,916	$	17,316

Investments in marketable equity securities consist of investments in the common stock of industrial and other companies.

Our non-marketable equity investments include investments in other retail distribution operations and community-based initiatives.

The amortized cost and fair value of our investments in available-for-sale debt securities, by security type are shown in the table below (in thousands):


	June 29, 2024				March 30, 2024
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Residential mortgage-backed securities	$	4,849	$	4,782	$	2,933	$	2,865
State and political subdivision debt securities	5,103		5,015		5,041		4,930
Corporate debt securities	10,423		10,228		11,117		10,874
	$	20,375	$	20,025	$	19,091	$	18,669

Table of Contents

The amortized cost and fair value of our investments in available-for-sale debt securities, by contractual maturity, are shown in the table below (in thousands). Expected maturities may differ from contractual maturities as borrowers at times have the right to call or prepay obligations, with or without penalties.


	June 29, 2024
	Amortized Cost		Fair Value
Due in less than one year	$	7,880	$	7,778
Due after one year through five years	7,421		7,240
Due after five years through ten years	225		225
Due after ten years	—		—
Mortgage-backed securities	4,849		4,782
	$	20,375	$	20,025

Net investment gains and losses on marketable equity securities were as follows (in thousands):


	Three Months Ended
		June 29, 2024		July 1, 2023
Marketable equity securities
Net (loss) gain recognized during the period		$	(454)	$	460
Less: Net (gain) recognized on securities sold during the period		(552)		(20)
Unrealized (loss) gain recognized during the period on securities still held		$	(1,006)	$	440

5. Inventories

Inventories consisted of the following (in thousands):


	June 29, 2024		March 30, 2024
Raw materials	$	75,589	$	78,241
Work in process	30,089		27,977
Finished goods	139,166		135,121
	$	244,844	$	241,339

Table of Contents

6. Consumer Loans Receivable

The following table summarizes consumer loans receivable (in thousands):


	June 29, 2024		March 30, 2024
Loans held for investment, previously securitized	$	15,989	$	16,968
Loans held for investment	12,612		12,826
Loans held for sale	22,432		15,140
Construction advances	1,615		722
	52,648		45,656
Deferred financing fees and other, net	(594)		(523)
Allowance for loan losses	(1,016)		(1,066)
	51,038		44,067
Less current portion	(28,887)		(20,713)
	$	22,151	$	23,354

The consumer loans held for investment had the following characteristics:


	June 29, 2024		March 30, 2024
Weighted average contractual interest rate	8.1	%	8.1	%
Weighted average effective interest rate	8.9	%	10.4	%
Weighted average months to maturity	208		196

The following table is a consolidated summary of the delinquency status of the outstanding principal balance of consumer loans receivable (in thousands):


	June 29, 2024		March 30, 2024
Current	$	50,756	$	43,810
31 to 60 days	547		1,063
61 to 90 days	446		131
91+ days	899		652
	$	52,648	$	45,656

Table of Contents

The following table disaggregates the outstanding principal balance of consumer loans receivable by credit quality indicator and fiscal year of origination (in thousands):


	June 29, 2024
	2025		2024		2023		2022		2021		Prior		Total
Prime- FICO score 680 and greater	$	10,791	$	9,707	$	327	$	95	$	879	$	15,566	$	37,365
Near Prime- FICO score 620-679	1,128		2,144		—		—		1,044		9,269		13,585
Sub-Prime- FICO score less than 620	—		—		—		—		18		718		736
No FICO score	212		446		—		—		—		304		962
	$	12,131	$	12,297	$	327	$	95	$	1,941	$	25,857	$	52,648


	March 30, 2024
	2024		2023		2022		2021		2020		Prior		Total
Prime- FICO score 680 and greater	$	14,107	$	328	$	96	$	885	$	1,808	$	14,425	$	31,649
Near Prime- FICO score 620-679	1,633		—		—		1,202		942		8,684		12,461
Sub-Prime- FICO score less than 620	—		—		—		18		49		723		790
No FICO score	447		—		—		—		—		309		756
	$	16,187	$	328	$	96	$	2,105	$	2,799	$	24,141	$	45,656

As of June 29, 2024, 49% of the outstanding principal balance of the consumer loans receivable portfolio was concentrated in Texas. As of March 30, 2024, 46% of the outstanding principal balance of the consumer loans receivable portfolio was concentrated in Texas and 10% was concentrated in Florida. Other than Texas and Florida, no state had concentrations in excess of 10% of the outstanding principal balance of the consumer loans receivable as of June 29, 2024 or March 30, 2024.

7. Commercial Loans Receivable

The commercial loans receivable balance consists of direct financing arrangements for the home product needs of our independent distributors, community owners and developers.

Commercial loans receivable, net consisted of the following (in thousands):


	June 29, 2024		March 30, 2024
Loans receivable	$	96,366	$	91,938
Allowance for loan losses	(884)		(781)
Deferred financing fees, net	(138)		(116)
	95,344		91,041
Less current portion of commercial loans receivable (including from affiliates), net	(42,147)		(43,316)
	$	53,197	$	47,725

Table of Contents

The commercial loans receivable balance had the following characteristics:


	June 29, 2024		March 30, 2024
Weighted average contractual interest rate	7.0	%	7.4	%
Weighted average months outstanding	12		12

Nonperforming status includes loans accounted for on a non-accrual basis and accruing loans with principal payments 90 days or more past due. As of June 29, 2024 and March 30, 2024, there were no commercial loans considered nonperforming. The following table disaggregates the outstanding principal balance of our commercial loans receivable by fiscal year of origination (in thousands):


	June 29, 2024
	2025		2024		2023		2022		2021		Total
Performing	$	69,499	$	19,089	$	3,761	$	1,925	$	2,092	$	96,366


	March 30, 2024
	2024		2023		2022		2021		2020		Total
Performing	$	57,691	$	25,066	$	4,823	$	2,144	$	2,214	$	91,938

As of June 29, 2024 and March 30, 2024, there were no commercial loans 90 days or more past due that were still accruing interest, and we were not aware of any potential problem loans that would have a material effect on the commercial loans receivable balance.

As of June 29, 2024, we had concentrations of our outstanding principal balance of the commercial loans receivable balance in New York of 19% and California of 14%. As of March 30, 2024, 18% of our outstanding principal balance of the commercial loans receivable balance was in New York. No other state had concentrations in excess of 10% of the outstanding principal balance of the commercial loans receivable as of June 29, 2024 or March 30, 2024.

As of June 29, 2024 and March 30, 2024, one independent third-party and its affiliates comprised 11% and 13%, respectively, of the net commercial loans receivable principal balance outstanding, all of which are secured.

Table of Contents

8. Leases

We lease certain production and retail locations, office space and equipment. The following table provides information about the financial statement classification of our lease balances reported within the Consolidated Balance Sheets as of June 29, 2024 and March 30, 2024 (in thousands):


	Classification	June 29, 2024		March 30, 2024
ROU assets
Operating lease assets	Operating lease right-of-use ("ROU") assets	$	37,712	$	39,027
Finance lease assets	Property, plant and equipment, net (1)	5,869		5,913
Total lease assets		$	43,581	$	44,940

Lease Liabilities
Current:
Operating lease liabilities	Accrued expenses and other current liabilities	$	5,466	$	5,303
Finance lease liabilities	Accrued expenses and other current liabilities	81		80
Non-current:
Operating lease liabilities	Operating lease liabilities	33,873		35,148
Finance lease liabilities	Other liabilities	6,066		6,086
Total lease liabilities		$	45,486	$	46,617

(1) Recorded net of accumulated amortization of $0.5 million and $0.4 million as of June 29, 2024 and March 30, 2024, respectively.

9. Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following (in thousands):


	June 29, 2024		March 30, 2024
Salaries, wages and benefits	$	40,823	$	38,125
Customer deposits	44,994		40,856
Unearned insurance premiums	35,914		33,449
Estimated warranties	31,815		31,718
Accrued volume rebates	24,671		21,167
Insurance loss reserves	18,927		10,540
Accrued self-insurance	14,692		14,124






Other	52,738		49,757
	$	264,574	$	239,736

Table of Contents

10. Warranties

Activity in the liability for estimated warranties was as follows (in thousands):


	Three Months Ended
		June 29, 2024		July 1, 2023
Balance at beginning of period		$	31,718	$	31,368

Charged to costs and expenses		12,091		13,409
Payments and deductions		(11,994)		(12,376)
Balance at end of period		$	31,815	$	32,401

11. Other Liabilities

The following table summarizes secured financings and other obligations (in thousands):


	June 29, 2024		March 30, 2024
Finance lease liabilities	$	6,147	$	6,166
Other secured financing	1,849		1,916
	7,996		8,082
Less current portion included in Accrued expenses and other current liabilities	(330)		(323)
	$	7,666	$	7,759

12. Debt

We are party to a Credit Agreement (the "Credit Agreement") that matures in November 2027 with Bank of America, N.A., providing for a $50 million revolving credit facility (the "Revolving Credit Facility"), which may be increased up to an aggregate amount of $100 million.

As of June 29, 2024 and March 30, 2024, there were

SEC Form 10-Q filed by Cavco Industries Inc.