8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 28, 2019

CAVCO INDUSTRIES INC.

(Exact name of registrant as specified in its charter)

Delaware	000-08822	56-2405642
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

3636 North Central Avenue, Suite 1200
	Phoenix	Arizona	85012
(Address of principal executive offices, including zip code)

Registrant's telephone number, including area code: (602) 256-6263

Not applicable

(Former name or former address, if changed from last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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

Title of each class	Trading Symbol	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 is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

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. ☐

Item 2.02. Results of Operations and Financial Condition

On October 28, 2019, Cavco Industries, Inc., a Delaware corporation (the "Company"), announced financial results for its fiscal second quarter ended September 28, 2019. A copy of the Company’s press release announcing these financial results is attached as Exhibit 99.1 hereto and incorporated in this Item 2.02 by reference.

Item 9.01. Financial Statements and Exhibits

Exhibit Number	Description
99.1	Press Release dated October 28, 2019
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

CAVCO INDUSTRIES, INC.
By:	/s/ Daniel L. Urness
	Daniel L. Urness
	Executive Vice President, Chief Financial Officer and Treasurer
Date:	October 28, 2019

EXHIBIT INDEX

Exhibit Number	Description
99.1	Press Release dated October 28, 2019
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

EX-99.1

	For additional information, contact:
	Mark Fusler Director of Financial Reporting and Investor Relations investor_relations@cavco.com
News Release	Phone: 602-256-6263 On the Internet: www.cavco.com

FOR IMMEDIATE RELEASE

CAVCO INDUSTRIES REPORTS FISCAL 2020SECOND QUARTER RESULTS

PHOENIX, October 28, 2019 – Cavco Industries, Inc. (Nasdaq: CVCO) today announced financial results for the second fiscal quarter ended September 28, 2019. On August 2, 2019, the Company completed the acquisition of Destiny Homes, which operates a manufactured and modular housing factory in Moultrie, Georgia. The results from this acquired operation since the acquisition date are included in the current quarter's consolidated financial statements presented herein.

Financial highlights include the following:

• Net revenue for the second quarter of fiscal year 2020 was $268.7 million, up11.3% from $241.5 million for the second quarter of fiscal year 2019. The increase was from improved home sales volume, higher home selling prices and changes in product mix. Net revenue for the first six months of fiscal 2020 was $532.7 million, a 9.2%increase from $487.9 million in the comparable prior year period.

• Income from operationsincreased15.5% to $22.4 million for the second quarter of fiscal year 2020 compared to $19.4 million in the same quarter last year. During the period, the Company realized higher gross profit margins mainly from increased home selling prices coupled with lower material input costs. Income from operations for the first six months of fiscal 2020 was $47.4 million, a 13.9%increase from $41.6 million in the comparable prior year period.

• Net income was $20.9 million for the second quarter of fiscal year 2020, compared to net income of $15.6 million in the same quarter of the prior year, a 34.0%increase. Included in this quarter's results was a $3.4 million net gain on the sale of idle land recorded in Other income, net. For the six months ended September 28, 2019, net income was $42.2 million, up19.5% from net income of $35.3 million in the prior year period. Diluted net income per share was $2.25 and $4.56 for the three and six months ended September 28, 2019, respectively, compared to $1.67 and $3.80 for the comparable periods last year.

Overall production rates have improved and order backlog has declined to $137 million at the end of the quarter compared to $204 million in the comparable period. This strong backlog level is up slightly from $131 million in the sequential quarter and represents approximately seven weeks of production.

During each period presented, ancillary items had the following impact on the results of operations (in millions):

		Three Months Ended						Six Months Ended
		September 28, 2019			September 29, 2018			September 28, 2019			September 29, 2018
Selling, general and administrative expenses
	Amortization of additional director and officer insurance premiums	$	(2.1	)	$	—		$	(4.2	)	$	—
	Legal and other expenses related to the Securities and Exchange Commission inquiry	(0.8		)	—			(1.6		)	—
Other income, net
	Unrealized gains (losses) on corporate equity securities	0.2			(0.4		)	1.1			1.1
	Gain on sale of idle land	3.4			—			3.4			—
Income tax expense
	Tax benefits from stock option exercises	0.3			1.1			0.9			2.3

Commenting on the quarter, Bill Boor, President and Chief Executive Officer said, "Cavco’s second quarter results continue to demonstrate the underlying strength of our business. Backlogs remain strong and stable, as is consumer demand. As announced earlier, we completed the acquisition of Destiny Homes. The organization has proven to be an outstanding fit and Destiny’s products complement and strengthen our offering in the Southeast."

Cavco’s management will hold a conference call to review these results tomorrow, October 29, 2019, at 1:00 PM (Eastern Time). Interested parties can access a live webcast of the conference call on the Internet at https://investor.cavco.com. An archive of the webcast and presentation will be available for 90 days at https://investor.cavco.com.

Cavco Industries, Inc., headquartered in Phoenix, Arizona, designs and produces factory-built housing products primarily distributed through a network of independent and Company-owned retailers. The Company is one of the largest producers of manufactured homes in the United States, based on reported wholesale shipments, marketed under a variety of brand names including Cavco, Fleetwood, Palm Harbor, Fairmont, Friendship, Chariot Eagle, Lexington and Destiny. The Company is also a leading producer of park model RVs, vacation cabins and systems-built commercial structures, as well as modular homes built primarily under the Nationwide Homes brand. Cavco’s finance subsidiary, CountryPlace Mortgage, is an approved Fannie Mae and Freddie Mac seller/servicer and a Ginnie Mae mortgage-backed securities issuer that offers conforming mortgages, non-conforming mortgages and home-only loans to purchasers of factory-built homes. Our insurance subsidiary, Standard Casualty, provides property and casualty insurance to owners of manufactured homes.

Forward-Looking Statements

Certain statements contained in this release are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities and Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. In general, all statements that are not historical in nature are forward-looking. Forward-looking statements are typically included, for example, in discussions regarding the manufactured housing and site-built housing industries; our financial performance and operating results; and the expected effect of certain risks and uncertainties on our business, financial condition and results of operations. All forward-looking statements are subject to risks and uncertainties, many of which are beyond our control. As a result, our actual results or performance may differ materially from anticipated results or performance. Factors that could cause such differences to occur include, but are not limited to: our ability to successfully integrate past acquisitions or future acquisitions and the ability to attain the anticipated benefits of such acquisitions; the risk that any past or future acquisition may adversely impact our liquidity; involvement in vertically integrated lines of business, including manufactured housing consumer finance, commercial finance and insurance; information technology failures or cyber incidents; curtailment of available financing from home-only lenders; availability of wholesale financing and limited floor plan lenders; our participation in certain wholesale and retail financing programs for the purchase of our products by industry distributors and consumers, which may expose us to additional risk of credit loss; significant warranty and construction defect claims; our contingent repurchase obligations related to wholesale financing; market forces and housing demand fluctuations; net losses were incurred in certain prior periods and our ability to generate income in the future; a write-off of all or part of our goodwill; the cyclical and seasonal nature of our business; limitations on our ability to raise capital; competition; our ability to maintain relationships with independent distributors; our business and operations being concentrated in certain geographic regions; labor shortages and the pricing and availability of raw materials; unfavorable zoning ordinances; loss of any of our executive officers; organizational document provisions delaying or making a change in control more difficult; volatility of stock price; general deterioration in economic conditions and turmoil in the credit markets; governmental and regulatory disruption, including federal government shutdowns; extensive regulation affecting manufactured housing; potential financial impact on the Company from the subpoenas we received from the SEC, including the risk of potential litigation or regulatory action, and costs and expenses arising from the SEC subpoenasand the events described in or covered by the SEC subpoenas, which include the Company's indemnification obligations and insurance costs regarding such matters, and potential reputational damage that the Company may suffer; and losses not covered by our director and officer insurance may be large, adversely impacting financial performance; together with all of the other risks described in our filings with the Securities and Exchange Commission. Readers are specifically referred to the Risk Factors described in Item 1A of the 2019 Form 10-K, as may be amended from time to time, which identify important risks that could cause actual results to differ from those contained in the forward-looking statements. Cavco expressly disclaims any obligation to update any forward-looking statements contained in this release, whether as a result of new information, future events or otherwise. Investors should not place undue reliance on any such forward-looking statements.

CAVCO INDUSTRIES, INC.

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per share amounts)

	September 28, 2019		March 30, 2019
ASSETS	(Unaudited)
Current assets:
Cash and cash equivalents	$	190,478	$	187,370
Restricted cash, current	14,981		12,148
Accounts receivable, net	44,908		40,701
Short-term investments	13,375		12,620
Current portion of consumer loans receivable, net	35,482		30,058
Current portion of commercial loans receivable, net	17,694		15,234
Inventories	115,205		116,203
Assets held for sale	—		3,061
Prepaid expenses and other current assets	54,509		44,654
Total current assets	486,632		462,049
Restricted cash	350		351
Investments	32,381		32,137
Consumer loans receivable, net	53,470		56,727
Commercial loans receivable, net	28,565		27,772
Property, plant and equipment, net	70,199		63,484
Goodwill and other intangibles, net	90,509		82,696
Operating lease right-of-use assets	11,732		—
Total assets	$	773,838	$	725,216
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	29,886	$	29,305
Accrued liabilities	137,936		125,181
Current portion of securitized financings and other	1,875		19,522
Total current liabilities	169,697		174,008
Operating lease liabilities	8,735		—
Deferred income taxes	8,043		7,002
Securitized financings and other	14,359		14,618
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; Outstanding 9,127,466 and 9,098,320 shares, respectively	91		91
Additional paid-in capital	250,584		249,447
Retained earnings	322,245		280,078
Accumulated other comprehensive income (loss)	84		(28		)
Total stockholders’ equity	573,004		529,588
Total liabilities and stockholders’ equity	$	773,838	$	725,216

CAVCO INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF INCOME

(Dollars in thousands, except per share amounts)

(Unaudited)

	Three Months Ended						Six Months Ended
	September 28, 2019			September 29, 2018			September 28, 2019			September 29, 2018
Net revenue	$	268,675		$	241,530		$	532,717		$	487,933
Cost of sales	210,208			192,114			413,952			387,041
Gross profit	58,467			49,416			118,765			100,892
Selling, general and administrative expenses	36,083			30,035			71,347			59,248
Income from operations	22,384			19,381			47,418			41,644
Interest expense	(302		)	(941		)	(788		)	(1,913		)
Other income, net	5,173			1,077			7,987			3,922
Income before income taxes	27,255			19,517			54,617			43,653
Income tax expense	(6,370		)	(3,941		)	(12,450		)	(8,386		)
Net income	$	20,885		$	15,576		$	42,167		$	35,267
Net income per share:
Basic	$	2.29		$	1.72		$	4.63		$	3.89
Diluted	$	2.25		$	1.67		$	4.56		$	3.80
Weighted average shares outstanding:
Basic	9,119,835			9,079,679			9,111,260			9,064,007
Diluted	9,266,085			9,304,188			9,241,834			9,287,730

CAVCO INDUSTRIES, INC.

OTHER OPERATING DATA

(Dollars in thousands)

(Unaudited)

	Three Months Ended				Six Months Ended
	September 28, 2019		September 29, 2018		September 28, 2019		September 29, 2018
Net revenue:
Factory-built housing	$	252,690	$	227,094	$	501,458	$	459,856
Financial services	15,985		14,436		31,259		28,077
Total net revenue	$	268,675	$	241,530	$	532,717	$	487,933
Gross profit:
Factory-built housing	$	48,639	$	41,798	$	100,774	$	85,684
Financial services	9,828		7,618		17,991		15,208
Total gross profit	$	58,467	$	49,416	$	118,765	$	100,892
Income from operations:
Factory-built housing	$	17,059	$	15,878	$	38,443	$	34,714
Financial services	5,325		3,503		8,975		6,930
Total income from operations	$	22,384	$	19,381	$	47,418	$	41,644
Capital expenditures	$	1,881	$	2,197	$	3,944	$	3,876
Depreciation	$	1,257	$	1,090	$	2,417	$	2,110
Amortization of other intangibles	$	151	$	80	$	231	$	164
Total factory-built homes sold	3,781		3,536		7,588		7,423

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XML

Document and Entity Information Document and Entity Information	Oct. 28, 2019
Document and Entity Information [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Oct. 28, 2019
Entity Registrant Name	CAVCO INDUSTRIES INC.
Entity Central Index Key	0000278166
Entity Emerging Growth Company	false
Entity File Number	000-08822
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	56-2405642
Entity Address, Address Line One	3636 North Central Avenue, Suite 1200
Entity Address, City or Town	Phoenix
Entity Address, State or Province	AZ
Entity Address, Postal Zip Code	85012
City Area Code	602
Local Phone Number	256-6263
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, par value $0.01
Trading Symbol	CVCO
Security Exchange Name	NASDAQ