EX-99.1 2 cvco-2019928xex991.htm EXHIBIT 99.1 Exhibit


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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 2020 SECOND 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, up 11.3% 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 operations increased 15.5% 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, up 19.5% 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 subpoenas and 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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