CAVCO INDUSTRIES, INC. 10-Q

Item 1. Financial Statements CAVCO INDUSTRIES, INC. CONSOLIDATED BALANCE SHEETS (Dollars in thousands, except per share amounts) September 26, 2020 March 28, 2020 ASSETS (Unaudited) Current assets: Cash and cash equivalents $ 312,243 $ 241,826 Restricted cash, current 16,691 13,446 Accounts receivable, net 36,852 42,800 Short-term investments 16,589 14,582 Current portion of consumer loans receivable, net 39,023 32,376 Current portion of commercial loans receivable, net 13,261 14,657 Current portion of commercial loans receivable from affiliates, net 1,700 766 Inventories 111,872 113,535 Prepaid expenses and other current assets 49,193 42,197 Total current assets 597,424 516,185 Restricted cash 335 335 Investments 30,278 31,557 Consumer loans receivable, net 42,817 49,928 Commercial loans receivable, net 20,946 23,685 Commercial loans receivable from affiliates, net 5,571 7,457 Property, plant and equipment, net 77,836 77,190 Goodwill 75,090 75,090 Other intangibles, net 14,736 15,110 Operating lease right-of-use assets 17,477 13,894 Total assets $ 882,510 $ 810,431 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 32,919 $ 29,924 Accrued expenses and other current liabilities 173,184 139,930 Current portion of secured credit facilities and other 2,118 2,248 Total current liabilities 208,221 172,102 Operating lease liabilities 14,602 10,743 Secured credit facilities and other 11,933 12,705 Deferred income taxes 7,066 7,295 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 9,188,162 and 9,173,242 shares, respectively 92 92 Additional paid-in capital 254,297 252,260 Retained earnings 386,134 355,144 Accumulated other comprehensive income 165 90 Total stockholders' equity 640,688 607,586 Total liabilities and stockholders' equity $ 882,510 $ 810,431 See accompanying Notes to Consolidated Financial Statements 1 Table of Contents CAVCO INDUSTRIES, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Dollars in thousands, except per share amounts) (Unaudited) Three Months Ended Six Months Ended September 26, 2020 September 28, 2019 September 26, 2020 September 28, 2019 Net revenue $ 257,976 $ 268,675 $ 512,777 $ 532,717 Cost of sales 204,435 210,208 403,913 413,952 Gross profit 53,541 58,467 108,864 118,765 Selling, general and administrative expenses 35,453 36,083 70,776 71,347 Income from operations 18,088 22,384 38,088 47,418 Interest expense ( 194 ) ( 302 ) ( 390 ) ( 788 ) Other income, net 1,702 5,173 3,578 7,987 Income before income taxes 19,596 27,255 41,276 54,617 Income tax expense ( 4,547 ) ( 6,370 ) ( 9,553 ) ( 12,450 ) Net income $ 15,049 $ 20,885 $ 31,723 $ 42,167 Comprehensive income: Net income $ 15,049 $ 20,885 $ 31,723 $ 42,167 Reclassification adjustment for securities sold or matured 7 — 33 2 Applicable income taxes ( 2 ) — ( 7 ) ( 1 ) Net change in unrealized position of investments held 3 29 62 140 Applicable income taxes ( 1 ) ( 6 ) ( 13 ) ( 29 ) Comprehensive income $ 15,056 $ 20,908 $ 31,798 $ 42,279 Net income per share: Basic $ 1.64 $ 2.29 $ 3.46 $ 4.63 Diluted $ 1.62 $ 2.25 $ 3.42 $ 4.56 Weighted average shares outstanding: Basic 9,182,945 9,119,835 9,178,609 9,111,260 Diluted 9,295,409 9,266,085 9,280,080 9,241,834 See accompanying Notes to Consolidated Financial Statements 2 Table of Contents CAVCO INDUSTRIES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) (Unaudited) Six Months Ended September 26, 2020 September 28, 2019 OPERATING ACTIVITIES Net income $ 31,723 $ 42,167 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 3,182 2,648 Provision for credit losses 223 30 Deferred income taxes ( 18 ) 1,011 Stock-based compensation expense 2,048 1,448 Non-cash interest income, net ( 2,596 ) ( 694 ) Loss (gain) on sale or retirement of property, plant and equipment, net 242 ( 3,370 ) Gain on investments and sale of loans, net ( 9,597 ) ( 7,683 ) Changes in operating assets and liabilities: Accounts receivable 5,948 ( 3,300 ) Consumer loans receivable originated ( 82,352 ) ( 80,259 ) Proceeds from sales of consumer loans 80,589 77,182 Principal payments received on consumer loans receivable 6,974 4,759 Inventories 1,663 6,506 Prepaid expenses and other current assets 11,536 322 Commercial loans receivable 4,691 ( 1,409 ) Accounts payable and accrued expenses and other current liabilities 20,353 4,235 Net cash provided by operating activities 74,609 43,593 INVESTING ACTIVITIES Purchases of property, plant and equipment ( 3,773 ) ( 3,944 ) Payments for acquisition, net — ( 15,937 ) Proceeds from sale of property, plant and equipment 77 64 Purchases of investments ( 4,440 ) ( 2,751 ) Proceeds from sale of investments 8,054 4,260 Net cash used in investing activities ( 82 ) ( 18,308 ) FINANCING ACTIVITIES Payments for exercise of stock options ( 11 ) ( 311 ) Proceeds from secured financings and other 64 75 Payments on securitized financings and other ( 918 ) ( 19,109 ) Net cash used in financing activities ( 865 ) ( 19,345 ) Net increase in cash, cash equivalents and restricted cash 73,662 5,940 Cash, cash equivalents and restricted cash at beginning of the fiscal year 255,607 199,869 Cash, cash equivalents and restricted cash at end of the period $ 329,269 $ 205,809 Supplemental disclosures of cash flow information: Cash paid for income taxes $ 7,865 $ 13,073 Cash paid for interest $ 251 $ 473 Supplemental disclosures of noncash activity: GNMA loans eligible for repurchase $ 16,170 $ 704 Right-of-use assets recognized $ 5,617 $ 13,464 Operating lease obligations incurred $ 5,617 $ 13,489 See accompanying Notes to Consolidated Financial Statements 3 Table of Contents CAVCO INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Basis of Presentation The accompanying unaudited Consolidated Financial Statements of Cavco Industries, Inc. and its subsidiaries (collectively, 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 the opinion of management, these financial statements include all adjustments, including normal recurring adjustments, that the Company believes are necessary to fairly state the results for the periods presented. Certain prior period amounts have been reclassified to conform to current period classification. The Company has evaluated subsequent events after the balance sheet date through the date of the filing of this report with the SEC; and except for the events set forth in Note 22 of the Consolidated Financial Statements Notes ("Notes") of the Company's Quarterly Report on Form 10-Q for the period ended September 26, 2020, there were no subsequent events requiring disclosure. 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 the Company's 2020 Annual Report on Form 10-K for the year ended March 28, 2020 filed with the SEC on May 27, 2020 ("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 the accompanying Notes. The uncertainty created by the novel coronavirus COVID-19 ("COVID-19") have made such estimates more difficult and subjective. Due to that and other uncertainties, actual results could differ from those estimates. 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 31 st 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 31 st . The Company's current fiscal year will end on April 3, 2021. The Company operates principally in two segments: (1) factory-built housing, which includes wholesale and retail systems-built housing operations, and (2) financial services, which includes manufactured housing consumer finance and insurance. The Company designs and builds a wide variety of affordable manufactured homes, modular homes and park model RVs through 20 homebuilding production lines located throughout the United States, which are sold to a network of independent distributors, community owners and developers and through the Company's 40 Company-owned retail stores. Our financial services segment is comprised of a finance subsidiary, CountryPlace Acceptance Corp. ("CountryPlace"), and an insurance subsidiary, Standard Casualty Co. ("Standard Casualty"). CountryPlace is an approved Federal National Mortgage Association and Federal Home Loan Mortgage Corporation seller/servicer and a Government National Mortgage Association mortgage-backed securities issuer that offers conforming mortgages, non-conforming mortgages and home-only loans to purchasers of factory-built homes. Standard Casualty provides property and casualty insurance primarily to owners of manufactured homes. 4 Recently Issued or Adopted Accounting Standards. On March 29, 2020, the Company adopted the Financial Accounting Standards Board's ("FASB") Accounting Standards Update ("ASU") 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"). ASU 2016-13 changes the impairment model for most financial assets and certain other instruments and requires a forward-looking impairment model based on expected losses rather than incurred losses. The Company adopted the standard by recognizing the cumulative effect of initially applying the new credit loss standard as an adjustment to the opening balance of Retained earnings. The comparative information has not been restated and continues to be reported under the accounting standard in effect for the applicable prior periods. The cumulative effect of the changes made to our consolidated balance sheet at March 29, 2020 for the adoption of ASU 2016-13 was $ 733,000 , net of taxes. The application of ASU 2016-13 increased our allowance for loan losses by $ 435,000 for commercial loans receivable and $ 528,000 for non-acquired consumer loans receivable. It had an insignificant impact to our allowance for credit losses for Accounts receivable, net. The Company adopted ASU 2016-13 using the prospective transition approach for acquired consumer loans receivable assets that were previously accounted for under FASB Accounting Standards Codification ("ASC") 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality ("ASC 310-30"). The Company determined that $ 1.7 million of the existing purchase discount for acquired consumer loans was related to credit factors and was reclassified to the allowance for loan loss upon adoption. The remaining discount on the acquired consumer loans was determined to be related to non-credit factors and will be accreted into interest income over the life of the loans. For a description of other significant accounting policies used by the Company in the preparation of its Consolidated Financial Statements, please refer to Note 1 of the Notes to Consolidated Financial Statements included in the Form 10-K. 2. Revenue from Contracts with Customers The following table summarizes customer contract revenues disaggregated by reportable segment and source (in thousands): Three Months Ended Six Months Ended September 26, 2020 September 28, 2019 September 26, 2020 September 28, 2019 Factory-built housing U.S. Housing and Urban Development code homes $ 197,723 $ 207,556 $ 387,169 $ 410,035 Modular homes 20,483 19,412 41,266 38,819 Park model RVs 9,027 11,751 22,749 24,612 Other (1) 13,734 13,971 27,873 27,992 Net revenue from factory-built housing 240,967 252,690 479,057 501,458 Financial services Insurance agency commissions received from third-party insurance companies 777 274 1,547 1,429 Other (2) 16,232 15,711 32,173 29,830 Net revenue from financial services 17,009 15,985 33,720 31,259 Total Net revenue $ 257,976 $ 268,675 $ 512,777 $ 532,717 (1) Other factory-built housing revenue includes revenue from ancillary products and services including used homes, freight and other services. (2) Other financial services revenue includes consumer finance and insurance revenue that is not within the scope of ASU 2014-09, Revenue from Contracts with Customers ("Topic 606") . 5 Table of Contents 3. Restricted Cash Restricted cash consisted of the following (in thousands): September 26, 2020 March 28, 2020 Cash related to CountryPlace customer payments to be remitted to third parties $ 15,818 $ 12,740 Other restricted cash 1,208 1,041 $ 17,026 $ 13,781 Corresponding amounts for customer payments to be remitted to third parties are recorded in Accounts payable. The following table provides a reconciliation of Cash and cash equivalents and Restricted cash reported within the Consolidated Balance Sheets to the combined amounts shown on the Consolidated Statements of Cash Flows (in thousands): September 26, 2020 March 28, 2020 September 28, 2019 March 30, 2019 Cash and cash equivalents $ 312,243 $ 241,826 $ 190,478 $ 187,370 Restricted cash, current 16,691 13,446 14,981 12,148 Restricted cash 335 335 350 351 Cash, cash equivalents and restricted cash per statement of cash flows $ 329,269 $ 255,607 $ 205,809 $ 199,869 4. Investments Investments consisted of the following (in thousands): September 26, 2020 March 28, 2020 Available-for-sale debt securities $ 12,676 $ 14,774 Marketable equity securities 12,791 9,829 Non-marketable equity investments 21,400 21,536 46,867 46,139 Less current portion ( 16,589 ) ( 14,582 ) $ 30,278 $ 31,557 The Company's investments in marketable equity securities consist of investments in the common stock of industrial and other companies. As of September 26, 2020 and March 28, 2020, non-marketable equity investments included contributions of $ 15.0 million t o equity-method investments in community-based initiatives that buy and sell the Company's homes and provide home-only financing to residents of certain manufactured home communities. Other non-marketable equity investments included investments in other distribution operations. 6 Table of Contents The following tables summarize the Company's available-for-sale debt securities, gross unrealized gains and losses and fair value, aggregated by investment category (in thousands): September 26, 2020 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Residential mortgage-backed securities $ 3,605 $ 55 $ ( 19 ) $ 3,641 State and political subdivision debt securities 4,116 162 — 4,278 Corporate debt securities 4,746 15 ( 4 ) 4,757 $ 12,467 $ 232 $ ( 23 ) $ 12,676 March 28, 2020 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Residential mortgage-backed securities $ 5,400 $ 69 $ ( 26 ) $ 5,443 State and political subdivision debt securities 4,239 134 ( 3 ) 4,370 Corporate debt securities 5,021 5 ( 65 ) 4,961 $ 14,660 $ 208 $ ( 94 ) $ 14,774 The following tables show gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities had been in a continuous unrealized loss position (in thousands): September 26, 2020 Less than 12 Months 12 Months or Longer Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses Residential mortgage-backed securities $ 462 $ ( 8 ) $ 567 $ ( 11 ) $ 1,029 $ ( 19 ) State and political subdivision debt securities 250 — — — 250 — Corporate debt securities 1,117 ( 4 ) — — 1,117 ( 4 ) $ 1,829 $ ( 12 ) $ 567 $ ( 11 ) $ 2,396 $ ( 23 ) March 28, 2020 Less than 12 Months 12 Months or Longer Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses Residential mortgage-backed securities $ 133 $ — $ 1,779 $ ( 26 ) $ 1,912 $ ( 26 ) State and political subdivision debt securities 601 ( 2 ) 101 ( 1 ) 702 ( 3 ) Corporate debt securities 3,747 ( 65 ) — — 3,747 ( 65 ) $ 4,481 $ ( 67 ) $ 1,880 $ ( 27 ) $ 6,361 $ ( 94 ) 7 Table of Contents The Company is not aware of any changes to the securities or issuers that would indicate the losses above are indicative of credit impairment as of September 26, 2020. Further, the Company does not intend to sell the investments, and it is more likely than not that the Company will not be required to sell the investments, before recovery of their amortized cost. The amortized cost and fair value of the Company's investments in available-for-sale debt securities, by contractual maturity, are shown in the table below (in thousands). Expected maturities differ from contractual maturities as borrowers may have the right to call or prepay obligations, with or without penalties. September 26, 2020 Amortized Cost Fair Value Due in less than one year $ 3,506 $ 3,515 Due after one year through five years 3,013 3,040 Due after five years through ten years 1,028 1,109 Due after ten years 1,315 1,371 Mortgage-backed securities 3,605 3,641 $ 12,467 $ 12,676 The Company recognizes investment gains and losses on available-for-sale debt securities when it sells or otherwise disposes of securities using the specific identification method. For the three and six months ended September 26, 2020, there were no gross gains realized on the sale of available-for-sale debt securities and g ross losses realized were $ 5,000 . There were no gross gains or losses realized on the sale of available-for-sale debt securities during the three and six months ended September 28, 2019. The Company recognizes unrealized gains and losses on marketable equity securities from changes in market prices during the period as a component of earnings in the Consolidated Statements of Comprehensive Income. Net investment gains and losses on marketable equity securities were as follows (in thousands): Three Months Ended Six Months Ended September 26, 2020 September 28, 2019 September 26, 2020 September 28, 2019 Marketable equity securities: Net gains on securities held $ 1,278 $ 350 $ 3,275 $ 1,302 Net (losses) gains on securities sold ( 27 ) ( 1 ) 6 ( 2 ) $ 1,251 $ 349 $ 3,281 $ 1,300 5. Inventories Inventories consisted of the following (in thousands): September 26, 2020 March 28, 2020 Raw materials $ 41,907 $ 35,691 Work in process 15,723 13,953 Finished goods 54,242 63,891 $ 111,872 $ 113,535 8 Table of Contents 6. Consumer Loans Receivable The following table summarizes consumer loans receivable (in thousands): September 26, 2020 March 28, 2020 Loans held for investment (at Acquisition Date, defined below) $ 35,692 $ 37,779 Loans held for investment (originated after Acquisition Date) 19,299 20,140 Loans held for sale 18,986 14,671 Construction advances 14,063 13,400 88,040 85,990 Deferred financing fees and other, net ( 2,290 ) ( 1,919 ) Allowance for loan losses ( 3,910 ) ( 1,767 ) 81,840 82,304 Less current portion ( 39,023 ) ( 32,376 ) $ 42,817 $ 49,928 The Company acquired consumer loans receivable as part of its acquisition of Palm Harbor Homes, Inc. in April 2011 ("Acquisition Date"). The allowance for loan losses reflects the Company's judgment of the probable loss exposure on its loans held for investment portfolio. On March 29, 2020 the Company adopted ASU 2016-13 using the prospective transition approach for acquired consumer loans receivable assets that were previously accounted for under ASC 310-30. The Company determined th at $ 1.7 million o f the existing purchase discount for such consumer loans was related to credit factors and was reclassified to the allowance for loan loss upon adoption. The remaining discount on the acquired consumer loans was determined to be related to non-credit factors and will be accreted into interest income over the life of the loans. The following table represents changes in the estimated allowance for loan losses, including related additions and deductions to the allowance for loan losses (in thousands): Three Months Ended Six Months Ended September 26, 2020 September 28, 2019 September 26, 2020 September 28, 2019 Allowance for loan losses at beginning of period $ 4,012 $ 421 $ 1,767 $ 415 Impact of adoption of ASU 2016-13 — — 2,276 — Change in estimated loan losses, net ( 94 ) ( 6 ) 67 — Charge-offs ( 8 ) — ( 200 ) — Recoveries — — — — Allowance for loan losses at end of period $ 3,910 $ 415 $ 3,910 $ 415 The consumer loans held for investment had the following characteristics: September 26, 2020 March 28, 2020 Weighted average contractual interest rate 8.4 % 8.4 % Weighted average effective interest rate 9.6 % 9.3 % Weighted average months to maturity 163 164 9 Table of Contents The following table is a consolidated summary of the delinquency status of the outstanding amortized cost of consumer loans receivable (in thousands): September 26, 2020 March 28, 2020 Current $ 84,852 $ 83,861 31-to-60 days 1,200 547 61-to-90 days 26 307 91+ days 1,962 1,275 $ 88,040 $ 85,990 The following tables disaggregates CountryPlace's gross consumer loans receivable by credit quality indicator and fiscal year of origination (in thousands): September 26, 2020 2021 2020 2019 2018 2017 Prior Total March 28, 2020 Prime- FICO score 680 and greater $ 14,707 $ 8,496 $ 2,315 $ 1,523 $ 1,848 $ 25,991 $ 54,880 $ 55,513 Near Prime- FICO score 620-679 8,684 6,216 1,864 1,146 779 11,496 30,185 27,767 Sub-Prime- FICO score less than 620 100 89 — — 86 1,991 2,266 2,142 No FICO score 152 — 29 — — 528 709 568 $ 23,643 $ 14,801 $ 4,208 $ 2,669 $ 2,713 $ 40,006 $ 88,040 $ 85,990 Loan contracts secured by geographically concentrated collateral could experience higher rates of delinquencies, default and foreclosure losses than loan contracts secured by collateral that is more geographically dispersed. As of September 26, 2020 , 35 % of the outstanding principal balance of consumer loans receivable portfolio was concentrated in Texas and 19 % was concentrated in Florida. As of March 28, 2020, 36 % of the outstanding principal balance of the consumer loans receivable portfolio was concentrated in Texas and 16 % was concentrated in Florida. Other than Texas and Florida, no state had concentrations in excess of 10 % of the principal balance of the consumer loans receivable as of September 26, 2020 or March 28, 2020. Collateral for repossessed loans is acquired through foreclosure or similar proceedings and is recorded at the estimated fair value of the home less the costs to sell. At repossession, the fair value of the collateral is determined based on the historical recovery rates of previously charged-off loans; the loan is charged off and the loss is recorded to the allowance for loan losses. Repossessed homes totaled approximately $ 931,000 and $ 1.5 million as of September 26, 2020 and March 28, 2020, respectively, and are included in Prepaid expenses and other current assets in the Consolidated Balance Sheets. Foreclosure or similar proceedings in progress totaled approximately $ 240,000 and $ 560,000 as of September 26, 2020 and March 28, 2020, respectively. 7. Commercial Loans Receivable The Company's commercial loans receivable balance consists of two classes: (i) direct financing arrangements for the home product needs of the Company's independent distributors, communities and developers; and (ii) amounts loaned by the Company under participation financing programs. Under the terms of the direct programs, the Company provides funds for financed home purchases by independent distributors, communities and developers. The notes are secured by the homes as collateral and, in some instances, other security. Other terms of direct arrangements vary, depending on the needs of the borrower and the opportunity for the Company. 10 Table of Contents Under the terms of the participation programs, the Company provides loans to independent floor plan lenders, representing a significant portion of the funds that such financiers then lend to distributors to finance their inventory purchases. The participation commercial loans receivables are unsecured general obligations of the independent floor plan lenders. Commercial loans receivable, net consisted of the following, by class of financing notes receivable (in thousands): September 26, 2020 March 28, 2020 Direct loans receivable $ 42,336 $ 47,058 Participation loans receivable 175 144 Allowance for loan losses ( 789 ) ( 393 ) Deferred financing fees, net ( 244 ) ( 244 ) 41,478 46,565 Less current portion of commercial loans receivable (including from affiliates), net ( 14,961 ) ( 15,423 ) $ 26,517 $ 31,142 The commercial loans receivable balance had the following characteristics: September 26, 2020 March 28, 2020 Weighted average contractual interest rate 6.1 % 5.7 % Weighted average months to maturity 11 10 The risk of loss is spread over numerous borrowers. Borrower activity is monitored on a regular basis and contractual arrangements are in place to provide adequate loss mitigation in the event of a default. The Company has historically been able to sell repossessed homes, thereby mitigating loss exposure. If a default occurs and collateral is lost, the Company is exposed to loss of the full value of the home loan. The Company evaluates the potential for loss from its commercial loan programs based on the borrower's risk rating, overall financial stability, historical experience and estimates of other economic factors. The Company has included considerations related to the COVID-19 pandemic when assessing its risk of loan loss and setting reserve amounts for its commercial finance portfolio as of September 26, 2020. The following table represents changes in the estimated allowance for loan losses, including related additions and deductions to the allowance for loan losses (in thousands): Three Months Ended Six Months Ended September 26, 2020 September 28, 2019 September 26, 2020 September 28, 2019 Balance at beginning of period $ 828 $ 191 $ 393 $ 180 Impact of adoption of ASU 2016-13 — — 435 — Change in estimated loan losses, net ( 39 ) ( 28 ) ( 39 ) ( 17 ) Loans charged off, net of recoveries — — — — Balance at end of period $ 789 $ 163 $ 789 $ 163 11 Table of Contents The following table disaggregates the Company's commercial loans receivable by credit quality indicator and fiscal year of origination (in thousands): September 26, 2020 2021 2020 2019 2018 2017 Total March 28, 2020 Risk profile based on payment activity: Performing $ 18,860 $ 14,076 $ 5,699 $ 2,238 $ 1,570 $ 42,443 $ 47,016 Watch list — — 68 — — 68 186 Nonperforming — — — — — — — $ 18,860 $ 14,076 $ 5,767 $ 2,238 $ 1,570 $ 42,511 $ 47,202 At September 26, 2020, there were no commercial loans 90 days or more past due that were still accruing interest and the Company was not aware of any potential problem loans that would have a material effect on the commercial loans receivable balance. As of September 26, 2020, 10.5 % of the Company's outstanding commercial loans receivable principal balance was concentrated in Arizona and 10.0 % was concentrated in California. As of March 28, 2020, 11.0 % of the Company's outstanding commercial loans receivable principal balance was concentrated in California. No other state had concentrations in excess of 10 % of the principal balance of the consumer loans receivable as of September 26, 2020 or March 28, 2020. The Company had concentrations with one independent third-party and its affiliates that equaled 17.9 % and 21.0 % of the net commercial loans receivables principal balance outstanding, all of which was secured, as of September 26, 2020 and March 28, 2020 respectively. T he risks created by these concentrations have been considered in the determination of the adequacy of the allowance for loan loss. 8. Property, Plant and Equipment, net Property, plant and equipment, net, consisted of the following (in thousands): September 26, 2020 March 28, 2020 Property, plant and equipment, at cost: Land $ 26,804 $ 26,827 Buildings and improvements 53,743 52,011 Machinery and equipment 32,286 30,984 112,833 109,822 Accumulated depreciation ( 34,997 ) ( 32,632 ) $ 77,836 $ 77,190 Depreciation expense was $ 1.4 million and $ 1.3 million for the three months ended September 26, 2020 and September 28, 2019, respectively. Depreciation expense for the six months ended September 26, 2020 and September 28, 2019 was $ 2.8 million and $ 2.4 million, respectively. Included in the amounts above are certain assets under finance leases. See Note 9 for additional information. 9. Leases The Company leases certain production and retail locations, office space and equipment. During the period ended September 26, 2020, the Company executed various lease renewals, including a five-year extension at one of our active manufacturing facilities, which increased the right of use asset and lease liability. 12 Table of Contents The present value of minimum payments for future fiscal years under non-cancelable leases as of September 26, 2020 was as follows (in thousands): Operating Leases Finance Leases Total Remainder of 2021 $ 2,116 $ 37 $ 2,153 2022 4,154 73 4,227 2023 3,827 73 3,900 2024 3,487 73 3,560 2025 2,706 73 2,779 2026 2,799 49 2,848 Thereafter 2,206 — 2,206 21,295 378 21,673 Less amount representing interest ( 2,612 ) ( 45 ) ( 2,657 ) 18,683 333 19,016 Less current portion ( 4,081 ) ( 72 ) ( 4,153 ) $ 14,602 $ 261 $ 14,863 10. Goodwill and Other Intangibles Goodwill and other intangibles, net, consisted of the following (in thousands): September 26, 2020 March 28, 2020 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Indefinite-lived: Goodwill $ 75,090 $ — $ 75,090 $ 75,090 $ — $ 75,090 Trademarks and trade names 8,900 — 8,900 8,900 — 8,900 State insurance licenses 1,100 — 1,100 1,100 — 1,100 85,090 — 85,090 85,090 — 85,090 Finite-lived: Customer relationships 11,300 ( 6,780 ) 4,520 11,300 ( 6,463 ) 4,837 Other 1,424 ( 1,208 ) 216 1,424 ( 1,151 ) 273 $ 97,814 $ ( 7,988 ) $ 89,826 $ 97,814 $ ( 7,614 ) $ 90,200 Amortization expense recognized on intangible assets was $ 187,000 and $ 151,000 for the three months ended September 26, 2020 and September 28, 2019, respectively. Amortization expense recognized on intangible assets was $ 374,000 and $ 231,000 for the six months ended September 26, 2020 and September 28, 2019, respectively. 13 Table of Contents 11. Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consisted of the following (in thousands): September 26, 2020 March 28, 2020 Customer deposits $ 30,153 $ 22,055 Salaries, wages and benefits 29,375 25,885 Company repurchase options on certain loans sold 23,854 7,444 Unearned insurance premiums 21,907 20,614 Estimated warranties 17,805 18,678 Accrued volume rebates 11,040 9,801 Insurance loss reserves 6,887 5,582 Accrued self-insurance 5,827 5,112 Operating lease liabilities 4,081 4,170 Accrued taxes 3,247 1,908 Reserve for repurchase commitments 2,463 2,679 Other 16,545 16,002 $ 173,184 $ 139,930 12. Warranties Activity in the liability for estimated warranties was as follows (in thousands): Three Months Ended Six Months Ended September 26, 2020 September 28, 2019 September 26, 2020 September 28, 2019 Balance at beginning of period $ 18,538 $ 17,760 $ 18,678 $ 17,069 Purchase accounting additions — 1,192 — 1,192 Charged to costs and expenses 6,232 6,765 12,579 14,586 Payments and deductions ( 6,965 ) ( 7,154 ) ( 13,452 ) ( 14,284 ) Balance at end of period $ 17,805 $ 18,563 $ 17,805 $ 18,563 13. Debt and Finance Lease Obligations Debt and finance lease obligations primarily consist of secured credit facilities at the Company's finance subsidiary and lease obligations in which it is expected that the Company will obtain ownership of a leased asset at the end of the lease term. The following table summarizes debt and finance lease obligations (in thousands): September 26, 2020 March 28, 2020 Secured credit facilities $ 9,793 $ 10,474 Other secured financings 3,925 4,113 Finance lease liabilities 333 366 14,051 14,953 Less current portion ( 2,118 ) ( 2,248 ) $ 11,933 $ 12,705 14 Table of Contents The Company's finance subsidiary entered into secured credit facilities with independent third-party banks with draw periods from one to fifteen months and maturity dates of ten years after the expiration of the draw periods, which have now expired. The proceeds were used by the Company to originate and hold consumer home-only loans secured by manufactured homes, which are pledged as collateral to the facilities. Upon completion of the draw down periods, the facilities were converted into an amortizing loan based on a 20-year amortization period with a balloon payment due upon maturity . The maximum advance for loans under this program was 80 % of the outstanding collateral principal balance, with the Company providing the remaining funds. As of September 26, 2020, the outstanding balance of the converted loans was $ 9.8 million at a weighted average interest rate of 4.91 %. See Note 9 for further discussion of the finance lease obligations. 14. Reinsurance Standard Casualty is primarily a specialty writer of manufactured home physical damage insurance. Certain of Standard Casualty's premiums and benefits are assumed from and ceded to other insurance companies under various reinsurance agreements. Standard Casualty remains obligated for amounts ceded in the event that the reinsurers do not meet their obligations. Substantially all of Standard Casualty's assumed reinsurance is with one entity. The effects of reinsurance on premiums written and earned were as follows (in thousands): Three Months Ended September 26, 2020 September 28, 2019 Written Earned Written Earned Direct premiums $ 4,915 $ 5,145 $ 4,179 $ 4,653 Assumed premiums—nonaffiliated 7,593 7,043 6,760 6,592 Ceded premiums—nonaffiliated ( 2,853 ) ( 2,853 ) ( 3,029 ) ( 3,029 ) $ 9,655 $ 9,335 $ 7,910 $ 8,216 Six Months Ended September 26, 2020 September 28, 2019 Written Earned Written Earned Direct premiums $ 10,680 $ 10,330 $ 9,212 $ 9,223 Assumed premiums—nonaffiliated 15,246 13,833 14,273 13,027 Ceded premiums—nonaffiliated ( 6,055 ) ( 6,055 ) ( 6,016 ) ( 6,016 ) $ 19,871 $ 18,108 $ 17,469 $ 16,234 Typical insurance policies written or assumed by Standard Casualty have a maximum coverage of $ 300,000 per claim, of which Standard Casualty cedes $ 175,000 of the risk of loss per reinsurance. Therefore, Standard Casualty's risk of loss is limited to $ 125,000 per claim on typical policies, subject to the reinsurers meeting their obligations. After this limit, amounts are recoverable by Standard Casualty through reinsurance for catastrophic losses in excess of $ 1.5 million per occurrence, up to a maximum of $ 43.5 million in the aggregate. 15. Commitments and Contingencies Repurchase Contingencies . The Company is contingently liable under terms of repurchase agreements with financial institutions providing inventory financing for independent distributors of its products. These arrangements, which are customary in the industry, provide for the repurchase of products sold to distributors in the event of default by the distributor. 15 Table of Contents The maximum amount for which the Company was liable under such agreements approximated $ 77.6 million and $ 79.3 million at September 26, 2020 and March 28, 2020, respectively, without reduction for the resale value of the homes. The Company applies ASC 460, Guarantees , and ASC 450-20, Loss Contingencies , to account for its liability for repurchase commitments. The Company had a reserve for repurchase commitments of $ 2.5 million and $ 2.7 million at September 26, 2020 and March 28, 2020, respectively. Letter of Credit. To secure certain reinsurance contracts, Standard Casualty maintained an irrevocable letter of credit of $ 11.0 million to provide assurance that Standard Casualty would fulfill its reinsurance obligations. The letter of credit was released on July 11, 2020. Construction-Period Mortgages. CountryPlace funds construction-period mortgages through periodic advances during home construction. At the time of initial funding, CountryPlace commits to fully fund the loan contract in accordance with a predetermined schedule. Subsequent advances are contingent upon the performance of contractual obligations by the seller of the home and the borrower. Cumulative advances on construction-period mortgages are carried on the Consolidated Balance Sheets at the amount advanced less a valuation allowance and are included in Consumer loans receivable, net. The total loan contract amount, less cumulative advances, represents an off-balance sheet contingent commitment of CountryPlace to fund future advances. Loan contracts with off-balance sheet commitments are summarized below (in thousands): September 26, 2020 March 28, 2020 Construction loan contract amount $ 39,094 $ 31,136 Cumulative advances ( 14,063 ) ( 13,400 ) $ 25,031 $ 17,736 Representations and Warranties of Mortgages Sold . CountryPlace sells loans to Government-Sponsored Enterprises ("GSEs") and whole-loan purchasers and finances certain loans with long-term credit facilities secured by the respective loans. In connection with these activities, CountryPlace provides to the GSEs and whole-loan purchasers and lenders representations and warranties related to the loans sold or financed. Upon a breach of a representation, CountryPlace may be required to repurchase the loan or to indemnify a party for incurred losses. The Company maintains a reserve for these contingent repurchase and indemnification obligations. This reserve of $ 1.3 million as of September 26, 2020 and $ 1.0 million as of March 28, 2020, included in Accrued expenses and other current liabilities, reflects management's estimate of probable loss. During the six months ended September 26, 2020, no claim request resulted in the execution of an indemnification agreement or in the repurchase of a loan . Interest Rate Lock Commitments . In originating loans for sale, CountryPlace issues interest rate lock commitments ("IRLCs") to prospective borrowers. These IRLCs represent an agreement to extend credit to a loan applicant, whereby the interest rate on the loan is set prior to loan closing or sale. These IRLCs bind the Company to fund the approved loan at the specified rate regardless of whether interest rates or market prices for similar loans have changed between the commitment date and the closing date. As of September 26, 2020, CountryPlace had outstanding IRLCs with a notional amount of $ 23.2 million, which are recorded at fair value in accordance with ASC 815, Derivatives and Hedging . During the three months ended September 26, 2020 and September 28, 2019, the Company recogn ized losses of $ 19,000 and $ 2,000 , respectively, on outstanding IRLCs. During the six months ended September 26, 2020 and September 28, 2019, the Company recognized losses of $ 144,000 and $ 3,000 , respectively, on outstanding IRLCs. Forward Sales Commitments . CountryPlace manages the risk profiles of a portion of its outstanding IRLCs and mortgage loans held for sale by entering into forward sales of mortgage-backed securities ("MBS") and whole loan sale commitments. As of September 26, 2020, CountryPlace had $ 58.8 million in outstanding notional forward sales of MBSs and forward sales commitments. Commitments for forward sales of whole loans are typically in an amount proportionate with the amount of IRLCs expected to close in particular time frames, assuming no change in mortgage interest rates, for the respective loan products intended for whole loan sale. 16 Table of Contents The estimated fair values of forward sales of MBS and whole loan sale commitments are based on quoted market values and are recorded within Prepaid expenses and other current assets in the Consolidated Balance Sheets. During the three months ended September 26, 2020 and September 28, 2019 , the Com pany recognized gains of $ 118,000 and $ 49,000 on forward sales of MBS and whole loan sale commitments, respectively. During the six months ended September 26, 2020 and September 28, 2019, the Company recognized gains of $ 1.1 million and $ 84,000 on forward sales of MBS and whole loan sale commitments, respectively. Legal Matters. Since 2018, the Company has been cooperating with an investigation by the enforcement staff of the SEC's Los Angeles Regional Office regarding securities trading in personal and Company accounts directed by the Company's former Chief Executive Officer, Joseph Stegmayer. The Audit Committee of the Board conducted an internal investigation led by independent legal counsel and other advisers and, following the completion of its work in early 2019, the Audit Committee shared the results of its work with the Company's auditors, listing exchange and the SEC staff. The Company has also made documents and personnel available to the SEC staff and intends to continue cooperating with its investigation. The Company has been exploring the possibility of a settlement with the SEC staff, but at this time, the Company is unable to estimate the amount of a potential loss, if any. Joseph D. Robles v. Cavco Industries, Inc., was filed in the Superior Court for the State of California, Riverside on June 25, 2019 and Malik Griffin v. Fleetwood Homes, Inc ., was filed in the Superior Court for the State of California, San Bernardino on September 19, 2019, seeking recovery on behalf of a putative class of current and former hourly employees for certain alleged wage-and-hour violations including, among other things: (i) alleged failure to comply with certain wage statement formatting requirements; (ii) alleged failure to compensate employees for straight-time and overtime hours worked; and (iii) alleged failure to provide employees with all requisite work breaks. All parties have agreed to jointly mediate both cases. The mediation is currently scheduled for January 27, 2021. The Company is party to certain other lawsuits in the ordinary course of business. Based on management's present knowledge of the facts and (in certain cases) advice of outside counsel, management does not believe that loss contingencies arising from pending matters are likely to have a material adverse effect on the Company's consolidated financial position, liquidity or results of operations after taking into account any existing reserves included in Accrued expenses and other current liabilities in the Consolidated Balance Sheets. However, future events or circumstances that may currently be unknown to management will determine whether the resolution of pending or threatened litigation or claims will ultimately have a material effect on the Company's consolidated financial position, liquidity or results of operations in any future reporting periods . 17 Table of Contents 16. Stockholders' Equity The following table represents changes in stockholders' equity for each quarterly period during the six months ended September 26, 2020 (dollars in thousands): Additional paid-in capital Retained earnings Accumulated other comprehensive income Total Common Stock Shares Amount Balance, March 28, 2020 9,173,242 $ 92 $ 252,260 $ 355,144 $ 90 $ 607,586 Cumulative effect of implementing ASU 2016-13, net — — — ( 733 ) — ( 733 ) Net income — — — 16,674 — 16,674 Issuance of common stock under stock incentive plans 3,822 — ( 533 ) — — ( 533 ) Stock-based compensation — — 945 — — 945 Other comprehensive income, net — — — — 68 68 Balance, June 27, 2020 9,177,064 $ 92 $ 252,672 $ 371,085 $ 158 $ 624,007 Net income — — — 15,049 — 15,049 Issuance of common stock under stock incentive plans 11,098 — 522 — — 522 Stock-based compensation — — 1,103 — — 1,103 Other comprehensive income, net — — — — 7 7 Balance, September 26, 2020 9,188,162 $ 92 $ 254,297 $ 386,134 $ 165 $ 640,688 18 Table of Contents The following table represents changes in stockholders' equity for each quarterly period during the six months ended September 28, 2019 (dollars in thousands): Additional paid-in capital Retained earnings Accumulated other comprehensive income (loss) Total Common Stock Shares Amount Balance, March 30, 2019 9,098,320 $ 91 $ 249,447 $ 280,078 $ ( 28 ) $ 529,588 Net income — — — 21,282 — 21,282 Issuance of common stock under stock incentive plans 13,304 — ( 1,252 ) — — ( 1,252 ) Stock-based compensation — — 630 — — 630 Other comprehensive income, net — — — — 89 89 Balance, June 29, 2019 9,111,624 $ 91 $ 248,825 $ 301,360 $ 61 $ 550,337 Net income — — — 20,885 — 20,885 Issuance of common stock under stock incentive plans 15,842 — 941 — — 941 Stock-based compensation — — 818 — — 818 Other comprehensive loss, net — — — — 23 23 Balance, September 28, 2019 9,127,466 $ 91 $ 250,584 $ 322,245 $ 84 $ 573,004 17. Earnings Per Share The following table sets forth the computation of basic and diluted earnings per share (dollars in thousands, except per share amounts): Three Months Ended Six Months Ended September 26, 2020 September 28, 2019 September 26, 2020 September 28, 2019 Net income $ 15,049 $ 20,885 $ 31,723 $ 42,167 Weighted average shares outstanding: Basic 9,182,945 9,119,835 9,178,609 9,111,260 Effect of dilutive securities 112,464 146,250 101,471 130,574 Diluted 9,295,409 9,266,085 9,280,080 9,241,834 Net income per share: Basic $ 1.64 $ 2.29 $ 3.46 $ 4.63 Diluted $ 1.62 $ 2.25 $ 3.42 $ 4.56 Anti-dilutive common stock equivalents excluded from the computation of diluted earnings per share for the three months ended September 26, 2020 and September 28, 2019 were 20,582 and 22,536 , respectively. Anti-dilutive common stock equivalents excluded from the computation of diluted earnings per share for the six months ended September 26, 2020 and September 28, 2019 were 30,182 and 42,401 , respectively. In addition, 14,405 and 11,450 outstanding restricted share awards were excluded from the calculation of diluted earnings per share for the three and six months ended September 26, 2020 and September 28, 2019, respectively, because the underlying performance criteria had not yet been met. 19 Table of Contents 18. Fair Value Measurements The book value and estimated fair value of the Company's financial instruments were as follows (in thousands): September 26, 2020 March 28, 2020 Book Value Estimated Fair Value Book Value Estimated Fair Value Available-for-sale debt securities $ 12,676 $ 12,676 $ 14,774 $ 14,774 Marketable equity securities 12,791 12,791 9,829 9,829 Non-marketable equity investments 21,400 21,400 21,536 21,536 Consumer loans receivable 81,840 98,045 82,304 97,395 Interest rate lock commitment derivatives 21 21 164 164 Forward loan sale commitment derivatives 123 123 ( 1,011 ) ( 1,011 ) Commercial loans receivable 41,478 41,144 46,565 46,819 Securitized financings and other ( 14,051 ) ( 13,638 ) ( 14,953 ) ( 15,592 ) See Note 19, Fair Value Measurements and the Fair Value of Financial Instruments caption in Note 1, Summary of Significant Accounting Policies in the Form 10-K for more information on the methodologies the Company uses in determining fair value. Assets and liabilities measured at fair value on a recurring basis are summarized below (in thousands): September 26, 2020 Total Level 1 Level 2 Level 3 Residential mortgage-backed securities (1) $ 3,641 $ — $ 3,641 $ — State and political subdivision debt securities (1) 4,278 — 4,278 — Corporate debt securities (1) 4,757 — 4,757 — Marketable equity securities (2) 12,791 12,791 — — Interest rate lock commitment derivatives (3) 21 — — 21 Forward loan sale commitment derivatives (3) 123 — — 123 Mortgage servicing rights (4) 1,058 — — 1,058 March 28, 2020 Total Level 1 Level 2 Level 3 Residential mortgage-backed securities (1) $ 5,443 $ — $ 5,443 $ — State and political subdivision debt securities (1) 4,370 — 4,370 — Corporate debt securities (1) 4,961 — 4,961 — Marketable equity securities (2) 9,829 9,829 — — Interest rate lock commitment derivatives (3) 164 — — 164 Forward loan sale commitment derivatives (3) ( 1,011 ) — — ( 1,011 ) Mortgage servicing rights (4) 1,225 — — 1,225 (1) Unrealized gains or losses on investments are recorded in Accumulated other comprehensive income at each measurement date. (2) Unrealized gains or losses on investments are recorded in earnings at each measurement date. (3) Gains or losses on derivatives are recorded in earnings through Cost of sales. 20 Table of Contents (4) Changes in the fair value of mortgage servicing rights are recorded in earnings through Net revenue. No transfers between Level 1, Level 2 or Level 3 occurred during the six months ended September 26, 2020. Financial instruments for which fair value is disclosed but not required to be recognized in the balance sheet on a recurring basis are summarized below (in thousands): September 26, 2020 Total Level 1 Level 2 Level 3 Loans held for investment $ 64,043 $ — $ — $ 64,043 Loans held for sale 19,939 — — 19,939 Construction advances 14,063 — — 14,063 Commercial loans receivable 41,144 — — 41,144 Securitized financings and other ( 13,638 ) — ( 13,638 ) — Non-marketable equity investments 21,400 — — 21,400 March 28, 2020 Total Level 1 Level 2 Level 3 Loans held for investment $ 68,503 $ — $ — $ 68,503 Loans held for sale 15,492 — — 15,492 Construction advances 13,400 — — 13,400 Commercial loans receivable 46,819 — — 46,819 Securitized financings and other ( 15,592 ) — ( 15,592 ) — Non-marketable equity investments 21,536 — — 21,536 No impairment charges were recorded during the six months ended September 26, 2020. Mortgage Servicing . Mortgage Servicing Rights ("MSRs") are the rights to receive a portion of the interest coupon and fees collected from the mortgagors for performing specified mortgage servicing activities, which consist of collecting loan payments, remitting principal and interest payments to investors, managing escrow accounts, performing loss mitigation activities on behalf of investors and otherwise administering the loan servicing portfolio. MSRs are initially recorded at fair value. Changes in fair value subsequent to the initial capitalization are recorded in earnings. September 26, 2020 March 28, 2020 Number of loans serviced with MSRs 4,671 4,688 Weighted average servicing fee (basis points) 31.81 31.12 Capitalized servicing multiple 56.49 % 67.19 % Capitalized servicing rate (basis points) 17.97 20.91 Serviced portfolio with MSRs (in thousands) $ 588,955 $ 585,777 Mortgage servicing rights (in thousands) $ 1,058 $ 1,225 21 Table of Contents 19. Related Party Transactions The Company has non-marketable equity investments in other distribution operations outside of Company-owned retail locations. In the ordinary course of business, the Company sells homes and lends to certain of these operations through its commercial lending programs. For the three months ended September 26, 2020 and September 28, 2019, the total amount of sales to related parties was $ 10.3 million and $ 10.4 million, respectively. For the six months ended September 26, 2020 and September 28, 2019, the total amount of sales to related parties was $ 23.0 million and $ 23.8 million, respectively. As of September 26, 2020, receivables from related parties included $ 2.9 million of accounts receivable and $ 7.3 million of commercial loans outstanding. As of March 28, 2020, receivables from related parties incl uded $ 1.7 million of accounts receivable and $ 8.2 million of commercial loans outstanding. 20. Acquisition of Destiny Homes On August 2, 2019, the Company purchased certain manufactured housing assets and assumed certain liabilities of Destiny Homes, which operates one manufacturing facility located in Moultrie, Georgia and produces and distributes manufactured and modular homes through a network of independent retailers in the Southeastern United States, further expanding the Company's reach. The Company finalized the purchase price allocation and has not made any purchase accounting adjustments during fiscal year 2021. Pro Forma Impact of Acquisition . The following table presents supplemental pro forma information as if the acquisition of Destiny Homes had occurred on March 31, 2019 (in thousands, except per share data): Three Months Ended Six Months Ended September 26, 2020 September 28, 2019 September 26, 2020 September 28, 2019 Net revenue $ 257,976 $ 270,239 $ 512,777 $ 543,951 Net income 15,049 21,165 31,723 43,807 Diluted net income per share 1.62 2.28 3.42 4.74 21. Business Segment Information The Company operates principally in two segments: (1) factory-built housing, which includes wholesale and retail systems-built housing operations and (2) financial services, which includes manufactured housing consumer finance and insurance. The following table details Net revenue and Income before income taxes by segment (in thousands): Three Months Ended Six Months Ended September 26, 2020 September 28, 2019 September 26, 2020 September 28, 2019 Net revenue: Factory-built housing $ 240,967 $ 252,690 $ 479,057 $ 501,458 Financial services 17,009 15,985 33,720 31,259 $ 257,976 $ 268,675 $ 512,777 $ 532,717 Income before income taxes: Factory-built housing $ 17,452 $ 22,463 $ 35,902 $ 46,776 Financial services 2,144 4,792 5,374 7,841 $ 19,596 $ 27,255 $ 41,276 $ 54,617 22 Table of Contents 22. Subsequent Events On October 27, 2020 , the Company’s Board of Directors approved a $ 100 million stock repurchase program that may be used to purchase its outstanding common stock. This program replaces a previously standing $ 10 million authorization, which is now canceled. The purchases may be made in the open market or one or more privately negotiated transactions in compliance with applicable securities laws and other legal requirements. The actual timing, number and value of shares repurchased under the program will be determined by the Company in its discretion and will depend on a number of factors, including market conditions, applicable legal requirements and other strategic capital needs and opportunities. The plan does not obligate Cavco to acquire any particular amount of common stock and may be suspended or discontinued at any time. 23 Table of Contents