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Cavco Industries Reports Fiscal 2018 First Quarter Results

PHOENIX, Aug. 07, 2017 (GLOBE NEWSWIRE) -- Cavco Industries, Inc. (NASDAQ:CVCO) today announced financial results for the first fiscal quarter ended July 1, 2017. On April 3, 2017, the Company completed the acquisition of Lexington Homes, Inc., which operates a manufactured and modular housing plant in Lexington, Mississippi. Since the acquisition date, the financial impact and fiscal quarter results from this new business are included in Cavco's consolidated financial statements presented herein.

Financial highlights include the following:

  • Net revenue for the first quarter of fiscal year 2018 totaled $206.8 million, up 11.7% from $185.1 million for the comparable prior year period. The increase was primarily from improved home sales volume and a larger proportion of higher priced homes sold.

  • Income before income taxes was $15.7 million for the first quarter of fiscal 2018, an 86.9% increase from $8.4 million income before income taxes in the comparable quarter last year. The improvement was from increased home sales as well as stronger earnings in the financial services segment compared to last year’s first fiscal quarter, as the segment's prior year results were significantly impacted by high insurance claims activity.

  • Income tax expense was $3.9 million with an effective tax rate of 24.9% for the first quarter of fiscal year 2018 compared to $3.0 million and an effective tax rate of 35.4% in the same quarter of the prior year. The current quarter contains a benefit of $1.4 million related to the Company's required implementation of Accounting Standards Update No. 2016-09, Compensation-Stock Compensation (Topic 718): Improvement to Employee Share-based Payment Accounting, which, among other items, requires the Company to record excess tax benefits on exercises of stock options as a reduction of income tax expense in the consolidated statement of comprehensive income, whereas they were previously recognized in equity.

  • Net income was $11.8 million for the first quarter of fiscal year 2018, compared to net income of $5.4 million in the same quarter of the prior year, a 118.5% increase.

  • Net income per share for the first quarter of fiscal 2018, based on basic and diluted weighted average shares outstanding, was $1.30 and $1.28, respectively, compared to net income per share of $0.61 and $0.60, respectively, for the comparable quarter last year.

Commenting on the results, Joseph Stegmayer, Chairman, President and Chief Executive Officer said, "It is gratifying to report improvement in the Company's performance this quarter. Our manufacturing facilities have worked to increase production rates as a result of higher levels of incoming home sales orders, while remaining focused on home quality, design and value."

Mr. Stegmayer continued, "We are also pleased with our geographic market expansion in Mississippi and surrounding states via the acquisition of Lexington Homes. The integration process is underway and we look forward to positive contributions from this new addition in the future."

Cavco’s management will hold a conference call to review these results tomorrow, August 8, 2017, at 11:00 AM (Eastern Time). Interested parties can access a live webcast of the conference call on the Internet at www.cavco.com under the Investor Relations link. An archive of the webcast and presentation will be available for 90 days at www.cavco.com under the Investor Relations link.

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 Homes, Fleetwood Homes, Palm Harbor Homes, Fairmont Homes, Friendship Homes, Chariot Eagle and Lexington Homes. 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 mortgage subsidiary, CountryPlace Mortgage, is an approved Fannie Mae and Freddie Mac seller/servicer, a Ginnie Mae mortgage-backed securities issuer that offers conforming mortgages, non-conforming mortgages and chattel loans to purchasers of factory-built and site-built homes. Our insurance subsidiary, Standard Casualty, provides property and casualty insurance to owners of manufactured homes.

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: adverse industry conditions; our ability to successfully integrate past acquisitions, including the recent acquisition of Lexington Homes, and any future acquisition or 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; a constrained consumer financing market; curtailment of available financing for retailers in the manufactured housing industry; our participation in certain wholesale and retail financing programs for the purchase of our products by industry distributors and consumers 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 declining housing demand; net losses were incurred in certain prior periods and there can be no assurance that we will 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; 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 continued turmoil in the credit markets; increased costs of healthcare benefits for employees; governmental and regulatory disruption; information technology failures and data security breaches; extensive regulation affecting manufactured housing; 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 2017 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 any reliance on any such forward-looking statements.


CAVCO INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share amounts)
 
  July 1,
2017
  April 1,
2017
ASSETS (Unaudited)    
Current assets:      
Cash and cash equivalents $ 129,509     $ 132,542  
Restricted cash, current 13,323     11,573  
Accounts receivable, net 34,490     31,221  
Short-term investments 12,386     11,289  
Current portion of consumer loans receivable, net 33,159     31,115  
Current portion of commercial loans receivable, net 7,380     7,932  
Inventories 99,080     93,855  
Prepaid expenses and other current assets 27,317     28,033  
Deferred income taxes, current     9,204  
Total current assets 356,644     356,764  
Restricted cash 725     724  
Investments 30,440     30,256  
Consumer loans receivable, net 65,220     64,686  
Commercial loans receivable, net 18,910     17,901  
Property, plant and equipment, net 57,587     56,964  
Goodwill and other intangibles, net 80,129     80,021  
Total assets $ 609,655     $ 607,316  
LIABILITIES AND STOCKHOLDERS’ EQUITY      
Current liabilities:      
Accounts payable $ 25,003     $ 24,010  
Accrued liabilities 111,226     109,789  
Current portion of securitized financings and other 6,149     6,417  
Total current liabilities 142,378     140,216  
Securitized financings and other 51,440     51,574  
Deferred income taxes 11,429     21,118  
Stockholders’ equity:      
Preferred stock, $.01 par value; 1,000,000 shares authorized; No shares issued or outstanding      
Common stock, $.01 par value; 40,000,000 shares authorized; Outstanding 9,018,820 and 8,994,968 shares, respectively 90     90  
Additional paid-in capital 243,524     244,791  
Retained earnings 159,963     148,141  
Accumulated other comprehensive income 831     1,386  
Total stockholders’ equity 404,408     394,408  
Total liabilities and stockholders’ equity $ 609,655     $ 607,316  



CAVCO INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Dollars in thousands, except per share amounts)
(Unaudited)
 
  Three Months Ended
  July 1,
2017
  July 2,
2016
Net revenue $ 206,816     $ 185,141  
Cost of sales 164,850     151,889  
Gross profit 41,966     33,252  
Selling, general and administrative expenses 26,305     24,687  
Income from operations 15,661     8,565  
Interest expense (1,048 )   (1,161 )
Other income, net 1,038     1,026  
Income before income taxes 15,651     8,430  
Income tax expense (3,898 )   (2,987 )
Net income $ 11,753     $ 5,443  
       
Comprehensive income:      
Net income $ 11,753     $ 5,443  
Unrealized loss on available-for-sale securities, net of tax (555 )   (55 )
Comprehensive income $ 11,198     $ 5,388  
       
Net income per share:      
Basic $ 1.30     $ 0.61  
Diluted $ 1.28     $ 0.60  
Weighted average shares outstanding:      
Basic 9,006,999     8,937,265  
Diluted 9,162,491     9,085,042  



CAVCO INDUSTRIES, INC.
OTHER OPERATING DATA
(Dollars in thousands)
(Unaudited)
 
  Three Months Ended
  July 1,
2017
  July 2,
2016
Net revenue:      
Factory-built housing $ 192,882     $ 172,486  
Financial services 13,934     12,655  
Total net revenue $ 206,816     $ 185,141  
       
Income before income taxes:      
Factory-built housing $ 13,170     $ 10,738  
Financial services 2,481     (2,308 )
Total income before income taxes $ 15,651     $ 8,430  
       
Capital expenditures $ 594     $ 1,890  
Depreciation $ 882     $ 854  
Amortization of other intangibles $ 92     $ 92  
       
Total factory-built homes sold 3,475     3,395  
           

/EIN News/ --

For additional information, contact:

Dan Urness
CFO and Treasurer
danu@cavco.com

Phone: 602-256-6263
On the Internet: www.cavco.com

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