CAVCO INDUSTRIES, INC. 10-Q

Item 1. Financial Statements CAVCO INDUSTRIES, INC. CONSOLIDATED BALANCE SHEETS (Dollars in thousands, except per share amounts) October 2, 2021 April 3, 2021 ASSETS (Unaudited) Current assets Cash and cash equivalents $ 224,291 $ 322,279 Restricted cash, current 19,850 16,693 Accounts receivable, net 72,038 47,396 Short-term investments 18,867 19,496 Current portion of consumer loans receivable, net 26,475 37,690 Current portion of commercial loans receivable, net 31,307 14,568 Current portion of commercial loans receivable from affiliates, net 294 4,664 Inventories 190,394 131,234 Prepaid expenses and other current assets 49,482 57,779 Total current assets 632,998 651,799 Restricted cash 335 335 Investments 35,650 35,010 Consumer loans receivable, net 32,124 37,108 Commercial loans receivable, net 36,685 20,281 Commercial loans receivable from affiliates, net 3,647 4,801 Property, plant and equipment, net 156,397 96,794 Goodwill 106,487 75,090 Other intangibles, net 35,404 14,363 Operating lease right-of-use assets 16,706 16,252 Total assets $ 1,056,433 $ 951,833 LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST, AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $ 42,549 $ 32,120 Accrued expenses and other current liabilities 237,462 203,133 Current portion of secured financings and other 2,260 1,851 Total current liabilities 282,271 237,104 Operating lease liabilities 13,240 13,361 Secured financings and other 17,305 10,335 Deferred income taxes 9,373 7,393 Redeemable noncontrolling interest 1,128 — Stockholders' equity Preferred stock, $ 0.01 par value; 1,000,000 shares authorized; No shares issued or outstanding — — Common stock, $ 0.01 par value; 40,000,000 shares authorized; Issued 9,275,016 and 9,241,256 shares, respectively 93 92 Treasury stock, at cost; 98,201 and 6,600 shares, respectively ( 21,877 ) ( 1,441 ) Additional paid-in capital 259,116 253,835 Retained earnings 495,713 431,057 Accumulated other comprehensive income 71 97 Total stockholders' equity 733,116 683,640 Total liabilities, redeemable noncontrolling interest and stockholders' equity $ 1,056,433 $ 951,833 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 October 2, 2021 September 26, 2020 October 2, 2021 September 26, 2020 Net revenue $ 359,543 $ 257,976 $ 689,965 $ 512,777 Cost of sales 269,615 204,435 526,024 403,913 Gross profit 89,928 53,541 163,941 108,864 Selling, general and administrative expenses 45,372 35,453 86,204 70,776 Income from operations 44,556 18,088 77,737 38,088 Interest expense ( 203 ) ( 194 ) ( 367 ) ( 390 ) Other income, net 4,668 1,702 7,129 3,578 Income before income taxes 49,021 19,596 84,499 41,276 Income tax expense ( 11,338 ) ( 4,547 ) ( 19,770 ) ( 9,553 ) Net income 37,683 15,049 64,729 31,723 Less: net income attributable to redeemable noncontrolling interest 73 — 73 — Net income attributable to Cavco common stockholders $ 37,610 $ 15,049 $ 64,656 $ 31,723 Comprehensive income Net income $ 37,683 $ 15,049 $ 64,729 $ 31,723 Reclassification adjustment for securities sold — 7 1 33 Applicable income taxes — ( 2 ) — ( 7 ) Net change in unrealized position of investments held ( 16 ) 3 ( 34 ) 62 Applicable income taxes 3 ( 1 ) 7 ( 13 ) Comprehensive income 37,670 15,056 64,703 31,798 Less: comprehensive income attributable to redeemable noncontrolling interest 73 — 73 — Comprehensive income attributable to Cavco common stockholders $ 37,597 $ 15,056 $ 64,630 $ 31,798 Net income per share attributable to Cavco common stockholders Basic $ 4.09 $ 1.64 $ 7.03 $ 3.46 Diluted $ 4.06 $ 1.62 $ 6.97 $ 3.42 Weighted average shares outstanding Basic 9,190,866 9,182,945 9,194,577 9,178,609 Diluted 9,273,136 9,295,409 9,274,440 9,280,080 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 October 2, 2021 September 26, 2020 OPERATING ACTIVITIES Net income $ 64,729 $ 31,723 Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization 3,190 3,182 Provision for credit losses ( 74 ) 223 Deferred income taxes 1,987 ( 18 ) Stock-based compensation expense 2,417 2,048 Non-cash interest income, net ( 770 ) ( 2,596 ) (Gain) loss on sale or retirement of property, plant and equipment, net ( 41 ) 242 Gain on investments and sale of loans, net ( 12,555 ) ( 9,597 ) Changes in operating assets and liabilities, net of acquisitions Accounts receivable ( 3,136 ) 5,948 Consumer loans receivable originated ( 85,370 ) ( 82,352 ) Proceeds from sales of consumer loans 101,556 80,589 Principal payments received on consumer loans receivable 6,875 6,974 Inventories ( 19,980 ) 1,663 Prepaid expenses and other current assets 993 11,536 Commercial loans receivable 3,331 4,691 Accounts payable and accrued expenses and other current liabilities 16,935 20,353 Net cash provided by operating activities 80,087 74,609 INVESTING ACTIVITIES Purchases of property, plant and equipment ( 4,671 ) ( 3,773 ) Payments for acquisitions, net ( 151,309 ) — Proceeds from sale of property, plant and equipment 53 77 Purchases of investments ( 6,251 ) ( 4,440 ) Proceeds from sale of investments 6,133 8,054 Net cash used in investing activities ( 156,045 ) ( 82 ) FINANCING ACTIVITIES Proceeds from (payments for) exercise of stock options 2,865 ( 11 ) Proceeds from secured financings and other — 64 Payments on secured financings and other ( 1,122 ) ( 918 ) Payments for common stock repurchases ( 20,436 ) — Distributions to noncontrolling interest ( 180 ) — Net cash used in financing activities ( 18,873 ) ( 865 ) Net (decrease) increase in cash, cash equivalents and restricted cash ( 94,831 ) 73,662 Cash, cash equivalents and restricted cash at beginning of the fiscal year 339,307 255,607 Cash, cash equivalents and restricted cash at end of the period $ 244,476 $ 329,269 Supplemental disclosures of cash flow information Cash paid for income taxes $ 19,127 $ 7,865 Cash paid for interest $ 195 $ 251 Supplemental disclosures of noncash activity Change in GNMA loans eligible for repurchase $ ( 8,830 ) $ 16,170 Right-of-use assets recognized and operating lease obligations incurred $ 2,205 $ 5,617 Fair value of assets acquired under finance leases $ 7,398 $ — Finance lease obligations incurred $ 6,043 $ — 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, "we," "us," "our," the "Company" or "Cavco") have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC") for Quarterly Reports on Form 10-Q and Article 10 of SEC Regulation S-X. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles ("GAAP") have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, these financial statements include all adjustments, including normal recurring adjustments, that are necessary to fairly state the results for the periods presented. We have evaluated subsequent events after the balance sheet date through the date of the filing of this report with the SEC, and there were no disclosable subsequent events. These Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and the Notes to the Consolidated Financial Statements included in our 2021 Annual Report on Form 10-K for the year ended April 3, 2021, filed with the SEC ("Form 10-K"). The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and the accompanying Notes. The uncertainty created by the novel coronavirus COVID-19 pandemic has 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 current fiscal year will end on April 2, 2022 and will include 52 weeks. We operate in two segments: (1) factory-built housing, which includes wholesale and retail factory-built housing operations, and (2) financial services, which includes manufactured housing consumer finance and insurance. We design and build a wide variety of affordable manufactured homes, modular homes and park model RVs through 26 homebuilding production lines located throughout the United States, which are sold to a network of independent distributors, community owners and developers and through our 46 Company-owned retail stores. The financial services segment is comprised of a finance subsidiary, CountryPlace Acceptance Corp. ("CountryPlace"), and an insurance subsidiary, Standard Casualty Company ("Standard Casualty"). CountryPlace is an approved Federal National Mortgage Association and Federal Home Loan Mortgage Corporation seller/servicer and a Government National Mortgage Association ("GNMA") 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. On September 24, 2021, we acquired the business and certain assets and liabilities of The Commodore Corporation ("Commodore"), including its six manufacturing facilities and two wholly-owned retail locations. The results of operations are included in our Consolidated Financial Statements from the date of acquisition. See Note 21 . In addition to the below, for a description of significant accounting policies we used in the preparation of our Consolidated Financial Statements, please refer to Note 1 of the Notes to Consolidated Financial Statements included in the Form 10-K. Redeemable Noncontrolling Interest. In fiscal year 2017, we purchased a 50 % interest in Craftsman Homes, LLC and Craftsman Homes Development, LLC (collectively known as “Craftsman" or the "Entities") from a third-party ("Seller"). Craftsman is a manufactured home street retailer in Nevada with four locations selling Company and other manufacturer branded homes. They also provide general construction to setup the home property and assist with multi-home developments and multi-family dwellings. 4 Table of Contents On July 4, 2021, we entered into an agreement (the "Craftsman Purchase Agreement") with the Seller to obtain the remaining 50 % ownership in Craftsman, owned by the Seller, to be purchased over time. As provided in the Craftsman Purchase Agreement, 20 % of the equity of Craftsman owned by the Seller was obtained as of July 4, 2021 by us for cash and, as a result, we obtained a controlling ownership interest. We accounted for this transaction as a business combination to be achieved in stages (see Note 21) and consolidated the entities while recognizing a noncontrolling interest for the remaining Seller ownership as discussed below. The Craftsman Purchase Agreement calls for an additional 20 % of the equity of Craftsman owned by the Seller to be purchased on December 31, 2023 by us for cash. As mandatory redemption of this ownership interest is required, $ 2.5 million for the fair value of this portion of the noncontrolling interest is recorded in the long-term liabilities section of the Consolidated Balance Sheet under the Secured financings and other caption. In each reporting period hereafter, until purchased by the Company, the mandatorily redeemable noncontrolling interest is adjusted to its current redemption value, based on a predetermined formula. Adjustments in the redemption value to the mandatorily redeemable noncontrolling interest are recorded to Interest expense. After December 31, 2023, the Seller has the right to require Cavco to purchase all of Seller's remaining 10 % ownership (“Put Right”) for an amount specified in the Agreement that is designed to approximate fair value. Likewise, Cavco has the right to require Seller to sell their remaining 10 % ownership (“Call Right”) based on the same timing as described above for the Put Right. The purchase price to be payable by the Company for the purchase of Seller's remaining ownership pursuant to the exercise of the Put Right or the Call Right will be settled in cash. As redemption of this remaining ownership is not a current obligation, $ 1.2 million for the initial fair value of this portion of the noncontrolling interest is classified as a temporary equity mezzanine item between liabilities and stockholders' equity in the Consolidated Balance Sheet under the Redeemable noncontrolling interest caption. The amount of income attributable to this noncontrolling interest is included in the Consolidated Statements of Comprehensive Income on the face of the Consolidated Statements of Comprehensive Income. 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 October 2, 2021 September 26, 2020 October 2, 2021 September 26, 2020 Factory-built housing U.S. Housing and Urban Development code homes $ 285,947 $ 197,723 $ 548,337 $ 387,169 Modular homes 31,386 20,483 58,003 41,266 Park model RVs 9,728 9,027 19,399 22,749 Other 15,033 13,734 28,638 27,873 342,094 240,967 654,377 479,057 Financial services Insurance agency commissions received from third-party insurance companies 850 777 1,723 1,547 Other 16,599 16,232 33,865 32,173 17,449 17,009 35,588 33,720 $ 359,543 $ 257,976 $ 689,965 $ 512,777 5 Table of Contents 3. Restricted Cash Restricted cash consisted of the following (in thousands): October 2, 2021 April 3, 2021 Cash related to CountryPlace customer payments to be remitted to third parties $ 18,820 $ 16,049 Other restricted cash 1,365 979 20,185 17,028 Less current portion ( 19,850 ) ( 16,693 ) $ 335 $ 335 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): October 2, 2021 September 26, 2020 Cash and cash equivalents $ 224,291 $ 312,243 Restricted cash 20,185 17,026 $ 244,476 $ 329,269 4. Investments Investments consisted of the following (in thousands): October 2, 2021 April 3, 2021 Available-for-sale debt securities $ 18,179 $ 14,946 Marketable equity securities 16,566 17,600 Non-marketable equity investments 19,772 21,960 54,517 54,506 Less current portion ( 18,867 ) ( 19,496 ) $ 35,650 $ 35,010 Investments in marketable equity securities consist of investments in the common stock of industrial and other companies. Our non-marketable equity investments include investments in community-based initiatives that buy and sell our homes and provide home-only financing to residents of certain manufactured home communities and other distribution operations. The amortized cost and fair value of our investments in available-for-sale debt securities, by security type are shown in the table below (in thousands). October 2, 2021 April 3, 2021 Amortized Cost Fair Value Amortized Cost Fair Value Residential mortgage-backed securities $ 2,352 $ 2,365 $ 2,787 $ 2,804 State and political subdivision debt securities 7,942 8,023 7,239 7,345 Corporate debt securities 7,795 7,791 4,797 4,797 $ 18,089 $ 18,179 $ 14,823 $ 14,946 6 Table of Contents The amortized cost and fair value of our investments in available-for-sale debt securities, by contractual maturity, are shown in the table below (in thousands). Expected maturities differ from contractual maturities as borrowers may have the right to call or prepay obligations, with or without penalties. October 2, 2021 Amortized Cost Fair Value Due in less than one year $ 1,611 $ 1,618 Due after one year through five years 11,807 11,792 Due after five years through ten years 1,268 1,321 Due after ten years 1,051 1,083 Mortgage-backed securities 2,352 2,365 $ 18,089 $ 18,179 There were no gross gains or losses realized on the sale of available-for-sale debt securities during the three and six months ended October 2, 2021. 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 gross losses realized were $ 5,000 . Net investment gains and losses on marketable equity securities were as follows (in thousands): Three Months Ended Six Months Ended October 2, 2021 September 26, 2020 October 2, 2021 September 26, 2020 Marketable equity securities Net gain recognized during the period $ 243 $ 1,251 $ 1,939 $ 3,281 Less: Net (gains) losses recognized on securities sold during the period ( 143 ) 27 ( 279 ) ( 6 ) Unrealized gains recognized during the period on securities still held $ 100 $ 1,278 $ 1,660 $ 3,275 5. Inventories Inventories consisted of the following (in thousands): October 2, 2021 April 3, 2021 Raw materials $ 78,810 $ 54,336 Work in process 27,983 19,149 Finished goods 83,601 57,749 $ 190,394 $ 131,234 7 Table of Contents 6. Consumer Loans Receivable The following table summarizes consumer loans receivable (in thousands): October 2, 2021 April 3, 2021 Loans held for investment, previously securitized $ 28,631 $ 31,949 Loans held for investment 16,207 18,690 Loans held for sale 10,253 15,587 Construction advances 7,485 13,801 62,576 80,027 Deferred financing fees and other, net ( 1,178 ) ( 2,041 ) Allowance for loan losses ( 2,799 ) ( 3,188 ) 58,599 74,798 Less current portion ( 26,475 ) ( 37,690 ) $ 32,124 $ 37,108 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 October 2, 2021 September 26, 2020 October 2, 2021 September 26, 2020 Allowance for loan losses at beginning of period $ 2,918 $ 4,012 $ 3,188 $ 1,767 Impact of adoption of Financial Accounting Standards Board's Accounting Standards Update 2016-13 Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("ASU 2016-13") — — — 2,276 Change in estimated loan losses, net 210 ( 94 ) ( 57 ) 67 Charge-offs ( 329 ) ( 8 ) ( 332 ) ( 200 ) Allowance for loan losses at end of period $ 2,799 $ 3,910 $ 2,799 $ 3,910 The consumer loans held for investment had the following characteristics: October 2, 2021 April 3, 2021 Weighted average contractual interest rate 8.2 % 8.3 % Weighted average effective interest rate 8.8 % 9.3 % Weighted average months to maturity 157 162 The following table is a consolidated summary of the delinquency status of the outstanding amortized cost of consumer loans receivable (in thousands): 8 Table of Contents October 2, 2021 April 3, 2021 Current $ 59,602 $ 76,378 31 to 60 days 110 508 61 to 90 days 2,502 21 91+ days 362 3,120 $ 62,576 $ 80,027 The following tables disaggregate gross consumer loans receivable by credit quality indicator and fiscal year of origination (in thousands): October 2, 2021 2022 2021 2020 2019 2018 Prior Total Prime- FICO score 680 and greater $ 6,664 $ 5,077 $ 2,776 $ 1,408 $ 765 $ 22,669 $ 39,359 Near Prime- FICO score 620-679 2,247 3,445 2,175 1,856 1,354 9,978 21,055 Sub-Prime- FICO score less than 620 — 21 53 — — 1,547 1,621 No FICO score — 149 19 27 — 346 541 $ 8,911 $ 8,692 $ 5,023 $ 3,291 $ 2,119 $ 34,540 $ 62,576 April 3, 2021 2021 2020 2019 2018 2017 Prior Total Prime- FICO score 680 and greater $ 18,250 $ 3,575 $ 1,718 $ 971 $ 1,959 $ 23,375 $ 49,848 Near Prime- FICO score 620-679 10,227 2,744 1,794 1,364 500 10,401 27,030 Sub-Prime- FICO score less than 620 348 53 — — 84 1,579 2,064 No FICO score 576 — 28 — — 481 1,085 $ 29,401 $ 6,372 $ 3,540 $ 2,335 $ 2,543 $ 35,836 $ 80,027 As of October 2, 2021, 36 % of the outstanding principal balance of the consumer loans receivable portfolio was concentrated in Texas and 18 % was concentrated in Florida. As of April 3, 2021, 35 % of the outstanding principal balance of the consumer loans receivable portfolio was concentrated in Texas and 20 % was concentrated in Florida. Other than Texas and Florida, no sta te had concentrations in excess of 10 % of the principal balance of the consumer loans receivable as of October 2, 2021 or April 3, 2021. Repossessed homes totaled approximately $ 893,000 and $ 518,000 as of October 2, 2021 and April 3, 2021, respectively, and are included in Prepaid expenses and other current assets in the Consolidated Balance Sheets. Foreclosure or similar proceedings in progress totaled approximately $ 927,000 and $ 1.1 million as of October 2, 2021 and April 3, 2021, respectively. 7. Commercial Loans Receivable The commercial loans receivable balance consists of direct financing arrangements for the home product needs of our independent distributors, community owners and developers and amounts loaned by us under participation financing programs. 9 Table of Contents Commercial loans receivable, net consisted of the following (in thousands): October 2, 2021 April 3, 2021 Loans receivable $ 73,006 $ 45,377 Allowance for loan losses ( 826 ) ( 816 ) Deferred financing fees, net ( 247 ) ( 247 ) 71,933 44,314 Less current portion of commercial loans receivable (including from affiliates), net ( 31,601 ) ( 19,232 ) $ 40,332 $ 25,082 The commercial loans receivable balance had the following characteristics: October 2, 2021 April 3, 2021 Weighted average contractual interest rate 6.3 % 6.4 % Weighted average months outstanding 10 11 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 October 2, 2021 September 26, 2020 October 2, 2021 September 26, 2020 Balance at beginning of period $ 785 $ 828 $ 816 $ 393 Impact of adoption of ASU 2016-13 — — — 435 Change in estimated loan losses, net 41 ( 39 ) 10 ( 39 ) Balance at end of period $ 826 $ 789 $ 826 $ 789 As of October 2, 2021 and April 3, 2021, there were no commercial loans considered watch list or nonperforming. The following table disaggregates our commercial loans receivable by fiscal year of origination (in thousands): October 2, 2021 2022 2021 2020 2019 2018 Prior Total Performing $ 25,069 $ 35,259 $ 7,338 $ 2,669 $ 1,379 $ 1,292 $ 73,006 April 3, 2021 2021 2020 2019 2018 2017 Prior Total Performing $ 30,627 $ 8,677 $ 3,206 $ 1,864 $ 1,003 $ — $ 45,377 At October 2, 2021, there were no commercial loans 90 days or more past due that were still accruing interest and we were not aware of any potential problem loans that would have a material effect on the commercial loans receivable balance. As of October 2, 2021, 34 % of our outstanding commercial loans receivable principal balance was concentrated in Pennsylvania. As of April 3, 2021, 13 % of our outstanding commercial loans receivable principal balance was concentrated in Arizona. No other state had concentrations in excess of 10 % of the principal balance of the consumer loans receivable as of October 2, 2021 or April 3, 2021. 10 Table of Contents We had concentrations with one independent third-party and its affiliates that equaled 12 % and 18 % of the net commercial loans receivable principal balance outstanding, all of which was secured, as of October 2, 2021 and April 3, 2021 . 8. Property, Plant and Equipment, net Property, plant and equipment, net, consisted of the following (in thousands): October 2, 2021 April 3, 2021 Property, plant and equipment, at cost Land $ 42,407 $ 28,314 Buildings and improvements 108,577 71,827 Machinery and equipment 45,628 34,146 196,612 134,287 Accumulated depreciation ( 40,215 ) ( 37,493 ) $ 156,397 $ 96,794 Depreciation expense was $ 1.4 million for each of the three month periods ending October 2, 2021 and September 26, 2020. Depreciation expense for the six months ended October 2, 2021 and September 26, 2020 was $ 2.9 million and $ 2.8 million, respectively. Included in the balances above are certain assets under finance leases. See Note 9 for further information. 9. Leases We lease certain production and retail locations, office space and equipment. During the period ended October 2, 2021, we executed various lease renewals and acquired certain assets under finance leases. The following table provides information about the financial statement classification of our lease balances reported within the Consolidated Balance Sheets as of October 2, 2021 and April 3, 2021 (in thousands): Classification October 2, 2021 April 3, 2021 ROU assets Operating lease assets Operating lease right-of-use assets $ 16,706 $ 16,252 Finance lease assets Property, plant and equipment, net (1) 8,352 986 Total lease assets $ 25,058 $ 17,238 Lease Liabilities Current: Operating lease liabilities Accrued expenses and other current liabilities $ 4,783 $ 4,184 Finance lease liabilities Current portion of secured credit facilities and other 401 71 Non-current: Operating lease liabilities Operating lease liabilities 13,240 13,361 Finance lease liabilities Secured credit facilities and other 5,923 233 Total lease liabilities $ 24,347 $ 17,849 (1) Recorded net of accumulated amortization of $ 149,000 and $ 143,000 as of October 2, 2021 and April 3, 2021, respectively. 11 Table of Contents The present value of minimum payments for future fiscal years under non-cancelable leases as of October 2, 2021 was as follows (in thousands): Operating Leases Finance Leases Total Remainder of 2022 $ 2,449 $ 206 $ 2,655 2023 4,667 411 5,078 2024 4,121 411 4,532 2025 3,103 411 3,514 2026 3,127 387 3,514 2027 1,087 338 1,425 Thereafter 1,439 10,415 11,854 19,993 12,579 32,572 Less amount representing interest ( 1,970 ) ( 6,255 ) ( 8,225 ) 18,023 6,324 24,347 Less current portion ( 4,783 ) ( 401 ) ( 5,184 ) $ 13,240 $ 5,923 $ 19,163 The following table provides information about the weighted average remaining lease terms and weighted average discount rates as of October 2, 2021 : Remaining Lease Term (Years) Discount Rate Operating leases 4.9 4.5 % Finance leases 34.9 4.5 % 10. Goodwill and Other Intangibles Goodwill and other intangibles, net, consisted of the following (in thousands): October 2, 2021 April 3, 2021 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Indefinite-lived Goodwill $ 106,487 $ — $ 106,487 $ 75,090 $ — $ 75,090 Trademarks and trade names 15,680 — 15,680 8,900 — 8,900 State insurance licenses 1,100 — 1,100 1,100 — 1,100 123,267 — 123,267 85,090 — 85,090 Finite-lived Customer relationships 25,400 ( 7,413 ) 17,987 11,300 ( 7,097 ) 4,203 Other 1,924 ( 1,287 ) 637 1,424 ( 1,264 ) 160 $ 150,591 $ ( 8,700 ) $ 141,891 $ 97,814 $ ( 8,361 ) $ 89,453 12 Table of Contents Changes in the carrying amount of Goodwill were as follows for the six months ended October 2, 2021 (in thousands). See Note 21 for further information. Balance at beginning of period $ 75,090 Goodwill recognized on Craftsman acquisition 3,933 Goodwill recognized on Commodore acquisition 27,464 Balance at end of period $ 106,487 Amortization expense recognized on intangible assets was $ 166,000 and $ 187,000 for the three months ended October 2, 2021 and September 26, 2020, respectively. Amortization expense recognized on intangible assets was $ 339,000 and $ 374,000 for the six months ended October 2, 2021 and September 26, 2020, respectively. Expected amortization for future fiscal years is as follows (in thousands): Remainder of fiscal year $ 1,985 2023 3,291 2024 1,749 2025 1,686 2026 1,666 2027 1,577 Thereafter 6,670 11. Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consisted of the following (in thousands): October 2, 2021 April 3, 2021 Customer deposits $ 49,219 $ 41,835 Salaries, wages and benefits 44,161 37,737 Estimated warranties 25,745 18,032 Unearned insurance premiums 24,498 22,643 Accrued volume rebates 22,008 12,132 Company repurchase options on certain loans sold 17,151 25,938 Other 54,680 44,816 $ 237,462 $ 203,133 12. Warranties Activity in the liability for estimated warranties was as follows (in thousands): Three Months Ended Six Months Ended October 2, 2021 September 26, 2020 October 2, 2021 September 26, 2020 Balance at beginning of period $ 19,344 $ 18,538 $ 18,032 $ 18,678 Purchase accounting additions 6,928 — 6,928 — Charged to costs and expenses 7,994 6,232 17,119 12,579 Payments and deductions ( 8,521 ) ( 6,965 ) ( 16,334 ) ( 13,452 ) Balance at end of period $ 25,745 $ 17,805 $ 25,745 $ 17,805 13 Table of Contents 13. Debt, Finance Lease and Mandatorily Redeemable Noncontrolling Interest Obligations The following table summarizes debt, finance lease and mandatorily redeemable noncontrolling interest obligations (in thousands): October 2, 2021 April 3, 2021 Secured term loan $ 7,718 $ 8,210 Finance lease obligations 6,324 304 Other secured financings 3,052 3,672 Mandatorily redeemable noncontrolling interest 2,471 — 19,565 12,186 Less current portion ( 2,260 ) ( 1,851 ) $ 17,305 $ 10,335 We entered into secured credit facilities with independent third-party banks to originate and hold consumer home-only loans secured by manufactured homes, which were pledged as collateral to the facilities. Those facilities have since been converted into an amortizing loan with maturity dates starting in 2028 and payments based on a 20 or 25-year amortization period, resulting in a balloon payment due upon maturity . The outstanding balance of the converted loans was $ 7.7 million as of October 2, 2021 and $ 8.2 million as of April 3, 2021 with a weighted average interest rate of 4.91 %. 14. Reinsurance and Insurance Loss Reserves Certain of Standard Casualty's premiums and benefits are assumed from and ceded to other insurance companies under various reinsurance agreements. We remain obligated for amounts ceded in the event that the reinsurers do not meet their obligations. 14 Table of Contents The effects of reinsurance on premiums written and earned were as follows (in thousands): Three Months Ended October 2, 2021 September 26, 2020 Written Earned Written Earned Direct premiums $ 6,310 $ 6,323 $ 4,915 $ 5,145 Assumed premiums—nonaffiliated 8,240 7,630 7,593 7,043 Ceded premiums—nonaffiliated ( 3,714 ) ( 3,714 ) ( 2,853 ) ( 2,853 ) $ 10,836 $ 10,239 $ 9,655 $ 9,335 Six Months Ended October 2, 2021 September 26, 2020 Written Earned Written Earned Direct premiums $ 13,149 $ 12,319 $ 10,680 $ 10,330 Assumed premiums—nonaffiliated 16,814 15,008 15,246 13,833 Ceded premiums—nonaffiliated ( 7,361 ) ( 7,361 ) ( 6,055 ) ( 6,055 ) $ 22,602 $ 19,966 $ 19,871 $ 18,108 Typical insurance policies written or assumed have a maximum coverage of $ 300,000 per claim, of which we cede $ 150,000 of the risk of loss per reinsurance. Therefore, our risk of loss is limited to $ 150,000 per claim on typical policies, subject to the reinsurers meeting their obligations. After this limit, amounts are recoverable through reinsurance for catastrophic losses in excess of $ 2 million per occurrence, up to a maximum of $ 55 million in the aggregate for that occurrence. Standard Casualty establishes reserves for claims and claims expense on reported and unreported claims of non-reinsured losses. The following details the activity in the reserve for the six months ended October 2, 2021 and September 26, 2020 (in thousands): Three Months Ended Six Months Ended October 2, 2021 September 26, 2020 October 2, 2021 September 26, 2020 Balance at beginning of period $ 8,348 $ 6,730 $ 7,451 $ 5,582 Net incurred losses during the year 7,282 7,477 15,257 13,460 Net claim payments during the year ( 8,280 ) ( 7,320 ) ( 15,358 ) ( 12,155 ) Balance at end of period $ 7,350 $ 6,887 $ 7,350 $ 6,887 15. Commitments and Contingencies Repurchase Contingencies . We are contingently liable under terms of repurchase agreements with financial institutions providing inventory financing to independent distributors of our 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. The maximum amount for which we were liable under such agreements approximated $ 95.7 million and $ 74.2 million at October 2, 2021 and April 3, 2021, respectively, without reduction for the resale value of the homes that are repurchased. We had a reserve for repurchase commitments of $ 2.7 million at October 2, 2021 and $ 2.3 million at April 3, 2021. Construction-Period Mortgages. We fund construction-period mortgages through periodic advances during home construction. At the time of initial funding, we commit to fully fund the loan contract in accordance with a predetermined schedule. The total loan contract amount, less cumulative advances, represents an off-balance sheet contingent commitment to fund future advances. 15 Table of Contents Loan contracts with off-balance sheet commitments are summarized below (in thousands): October 2, 2021 April 3, 2021 Construction loan contract amount $ 22,466 $ 37,628 Cumulative advances ( 7,485 ) ( 13,801 ) $ 14,981 $ 23,827 Representations and Warranties of Mortgages Sold . We sell loans to Government-Sponsored Enterprises ("GSEs") and whole-loan purchasers and finance certain loans with long-term credit facilities secured by the respective loans. In connection with these activities, we provide to GSEs and whole-loan purchasers and lenders representations and warranties related to the loans sold or financed. Upon a breach of a representation, we may be required to repurch ase the loan or to indemnify a party for incurred losses. We maintain a reserve for these contingent repurchase and indemnification obliga tions. This reserve of $ 1.2 million as of October 2, 2021 and April 3, 2021, included in Accrued expenses and other current liabilities, reflects management's estimate of probable loss. There were no claim requests that resulted in the execution of an indemnification agreement or in the repurchase of a loan during the six months ended October 2, 2021. Interest Rate Lock Commitments . In originating loans for sale, we issue interest rate lock commitments ("IRLCs") to prospective borrowers. These IRLCs bind us 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 October 2, 2021, we had outstanding IRLCs with a notional amount of $ 29.5 million. During the three months ended October 2, 2021 and September 26, 2020, we recognized losses of $ 5,000 and $ 19,000 , respectively, on outstanding IRLCs. For the six months ended October 2, 2021 and September 26, 2020, w e recognized gains of $ 42,000 and losses of $ 144,000 , respectively. Forward Sales Commitments . We manage the risk profiles of a portion of the outstanding IRLCs and mortgage loans held for sale by entering into forward sales of mortgage-backed securities ("MBS") and whole loan sale commitments (collectively "Commitments"). As of October 2, 2021, we had $ 33.5 million in outstanding Commitments. We recognized non-cash gains of $ 79,000 and $ 118,000 in the second quarter of 2022 and 2021, respectively. During the six months ended October 2, 2021 and September 26, 2020, we recognized losses of $ 268,000 and gains of $ 1.1 million , respectively. Legal Matters. On September 2, 2021, the SEC filed a civil complaint in the United States District Court, District of Arizona, naming the Company along with the Company’s former Chairman, President & Chief Executive Officer and the Company’s former Chief Financial Officer, alleging violations of the antifraud and internal accounting control provisions of the Securities Exchange Act of 1934 based on trading in the shares of another company directed by the former CEO that resulted in an unrealized gain of approximately $ 260,000 . In the prior year, the Company recorded an accrual relating to this loss contingency. The SEC action follows an investigation that began in 2018. The Company filed a summary judgment to dismiss on November 2, 2021. While the Company cannot predict with certainty the resolution of this matter, we do not believe that this proceeding will have a material adverse effect on the Company’s Consolidated Financial Statements. We are 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 our consolidated financial position, liquidity or results of operations after taking into account any existing reserves, which reserves are included in Accrued expenses and other current liabilities in the Consolidated Balance Sheets. However, future events or circumstances will determine whether the resolution of pending or threatened litigation or claims will ultimately have a material effect on our consolidated financial position, liquidity or results of operations in any future reporting periods. 16 Table of Contents 16. Stockholders' Equity and Redeemable Noncontrolling Interest The following table represents changes in stockholders' equity attributable to Cavco's stockholders and redeemable noncontrolling interest for each quarterly period during the six months ended October 2, 2021 (dollars in thousands): Equity Attributable to Cavco Stockholders Treasury Stock Additional paid-in capital Retained earnings Accumulated other comprehensive income Total Redeemable Noncontrolling Interest Common Stock Shares Amount Balance, April 3, 2021 9,241,256 $ 92 $ ( 1,441 ) $ 253,835 $ 431,057 $ 97 $ 683,640 $ — Net income — — — — 27,046 — 27,046 — Other comprehensive income, net — — — — — ( 13 ) ( 13 ) — Issuance of common stock under stock incentive plans 4,465 — — 136 — — 136 — Stock-based compensation — — — 1,100 — — 1,100 — Common stock repurchases — — ( 12,842 ) — — — ( 12,842 ) — Balance, July 3, 2021 9,245,721 $ 92 $ ( 14,283 ) $ 255,071 $ 458,103 $ 84 $ 699,067 $ — Initial value of noncontrolling interest upon transaction — — — — — — — 1,235 Net income — — — — 37,610 — 37,610 73 Other comprehensive income, net — — — — — ( 13 ) ( 13 ) — Issuance of common stock under stock incentive plans 29,295 1 — 2,728 — — 2,729 — Stock-based compensation — — — 1,317 — — 1,317 — Common stock repurchases — — ( 7,594 ) — — — ( 7,594 ) — Distributions — — — — — — — ( 180 ) Balance, October 2, 2021 9,275,016 $ 93 $ ( 21,877 ) $ 259,116 $ 495,713 $ 71 $ 733,116 $ 1,128 17 Table of Contents The following table represents changes in stockholders' equity attributable to Cavco's stockholders and redeemable noncontrolling interest for each quarterly period during the six months ended September 26, 2020 (dollars in thousands): Equity Attributable to Cavco Stockholders Treasury Stock Additional paid-in capital Retained earnings Accumulated other comprehensive income Total Redeemable Noncontrolling Interest 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 — Other comprehensive income, net — — — — — 68 68 — Issuance of common stock under stock incentive plans 3,822 — — ( 533 ) — — ( 533 ) — Stock-based compensation — — — 945 — — 945 — Balance, June 27, 2020 9,177,064 $ 92 $ — $ 252,672 $ 371,085 $ 158 $ 624,007 $ — Net income — — — — 15,049 — 15,049 — Other comprehensive income, net — — — — — 7 7 — Issuance of common stock under stock incentive plans 11,098 — — 522 — — 522 — Stock-based compensation — — — 1,103 — — 1,103 — Balance, September 26, 2020 9,188,162 $ 92 $ — $ 254,297 $ 386,134 $ 165 $ 640,688 $ — 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 October 2, 2021 September 26, 2020 October 2, 2021 September 26, 2020 Net income attributable to Cavco common stockholders $ 37,610 $ 15,049 $ 64,656 $ 31,723 Weighted average shares outstanding Basic 9,190,866 9,182,945 9,194,577 9,178,609 Effect of dilutive securities 82,270 112,464 79,863 101,471 Diluted 9,273,136 9,295,409 9,274,440 9,280,080 Net income per share attributable to Cavco common stockholders Basic $ 4.09 $ 1.64 $ 7.03 $ 3.46 Diluted $ 4.06 $ 1.62 $ 6.97 $ 3.42 Anti-dilutive common stock equivalents excluded from the computation of diluted earnings per share for the three months ended October 2, 2021 and September 26, 2020 were 2,808 and 20,582 , respectively. Anti-dilutive common stock equivalents excluded from the computation of diluted earnings per share for the six months ended October 2, 2021 and September 26, 2020 were 5,417 and 30,182 , respectively. 18 Table of Contents 18. Fair Value Measurements The book value and estimated fair value of our financial instruments were as follows (in thousands): October 2, 2021 April 3, 2021 Book Value Estimated Fair Value Book Value Estimated Fair Value Available-for-sale debt securities $ 18,179 $ 18,179 $ 14,946 $ 14,946 Marketable equity securities 16,566 16,566 17,600 17,600 Non-marketable equity investments 19,772 19,772 21,960 21,960 Consumer loans receivable 58,599 65,641 74,798 86,209 Commercial loans receivable 71,933 70,363 44,314 42,379 Secured financings and other ( 19,565 ) ( 19,454 ) ( 12,186 ) ( 12,340 ) 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 we use in determining fair value. 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. MSRs are initially recorded at fair value. October 2, 2021 April 3, 2021 Number of loans serviced with MSRs 4,533 4,647 Weighted average servicing fee (basis points) 34.39 33.57 Capitalized servicing multiple 73.7 % 45.9 % Capitalized servicing rate (basis points) 25.36 15.42 Serviced portfolio with MSRs (in thousands) $ 586,547 $ 593,939 MSRs (in thousands) $ 1,488 $ 916 19. Employee Benefit Plans As part of the Commodore acquisition, we entered into a Transition Services Agreement ("TSA") with the seller whereby we lease Commodore employees from the seller while we transition them to our payroll systems. Expenses related to the TSA totaled $ 1.4 million for the three and six months ended October 2, 2021. Commodore participates in the IAM National Pension Fund, a multiemployer defined benefit plan. Participation in this plan is available to all hourly employees who are members of the participating collective bargaining unit. Once the TSA ends, we will contribute to the plan a specified amount per hour worked for each eligible employee. Benefits under this plan are based on a fixed monthly benefit rate per year of credited service. The risks of participating in this multiemployer plan differ from single-employer plans. The potential risks include, but are not limited to, the use of the Company's contributions to provide benefits to employees of other participating employers, the Company becoming obligated for other participating employers' unfunded obligations and, upon the Company's withdrawal from the plan, the Company being required to pay the plan an amount based on the underfunded status of the plan, referred to as a withdrawal liability. 19 Table of Contents 20. Related Party Transactions We have non-marketable equity investments in other distribution operations outside of Company-owned retail stores. In the ordinary course of business, we sell homes and lend to certain of these operations through our commercial lending programs. For the three and six months ended October 2, 2021, the total amount of sales to non-consolidated related parties was $ 14.0 million and $ 28.8 million, respectively. For the three and six months ended September 26, 2020, the total amount of sales to non-consolidated related parties was $ 10.3 million and $ 23.0 million, respectively. As of October 2, 2021, receivables from non-consolidated related parties included $ 3.9 million of accounts receivable and $ 3.9 million of commercial loans outstanding. As of April 3, 2021, receivables from non-consolidated related parties included $ 4.7 million of accounts receivable and $ 9.5 million of commercial loans outstanding. 21. Acquisitions Craftsman Homes, LLC and Craftsman Development, LLC Acquisition In fiscal year 2017, we purchased a 50 % ownership interest in Craftsman for $ 1.3 million to expand our retail presence in Nevada. At the time of the acquisition of that ownership, we concluded that we were not considered to be the primary beneficiary and therefore did not consolidate the Entities. Since the date of acquisition, we have recorded a non-marketable equity investment for the ownership, with changes to that investment for earnings and distributions from the Entities. On July 4, 2021, we obtained an additional 20 % ownership interest in the Entities utilizing the same pre-tax income multiple as the 2017 purchase. As we now have a controlling interest, we have consolidated the Entities and remeasured the Entities' assets and liabilities to fair value, including our previous equity investment of $ 2.9 million in the Entities. As a result of the remeasurement, we recorded a gain of $ 3.3 million in Other income, net in the Consolidated Statements of Comprehensive Income. The purchase price on July 4, 2021 for 20 % ownership was $ 2.5 million, valuing the Entities at $ 12.4 million. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date (in thousands). Certain estimated values are not yet finalized and are subject to change, which could be significant. The allocation of the purchase price is still preliminary due to the short duration since the acquisition date and will be finalized upon completion of the analysis of the fair values of Craftsman's assets and specified liabilities. We expect to finalize these amounts as soon as possible but no later than one year from the acquisition date. July 4, 2021 Cash $ 6,466 Accounts receivable 577 Inventories 7,393 Property, plant and equipment 189 Other current assets 846 Intangible assets (1) 2,980 Total identifiable assets acquired 18,451 Accounts payable and accrued liabilities 10,028 Net identifiable assets acquired 8,423 Goodwill (2) 3,933 Net assets acquired $ 12,356 (1) Includes $ 3.0 million assigned to trademarks and trade names, which are considered indefinite lived intangible assets and are not subject to amortization. (2) Attributable to the Factory-built housing segment, all of which will be deductible for income tax purposes. 20 Table of Contents We recorded a Redeemable noncontrolling interest for the remaining 30 % ownership. As 20 % of this is considered mandatorily redeemable per the Agreement, $ 2.5 million for the fair value of this portion of the noncontrolling interest is recorded in the long-term liabilities section of the Consolidated Balance Sheet under the Secured financings and other caption. As we are not currently obligated for the redemption of the remaining 10 % ownership, $ 1.2 million for the initial fair value of this portion of the noncontrolling interest is classified as a temporary equity mezzanine item between liabilities and stockholders’ equity in the Consolidated Balance Sheet under the Redeemable noncontrolling interest caption. Since the acquisition date, Craftsman contributed Net revenue of $ 4.5 million for the three and six months ended October 2, 2021. Craftsman increased consolidated Net income on the Consolidated Statements of Comprehensive Income for the three and six months ended October 2, 2021 by $ 243,000 . Net income from the Craftsman acquisition included required purchase accounting adjustments whereby home product inventory is recorded at fair value upon acquisition. Commodore Homes Acquisition On September 24, 2021, we purchased certain manufactured housing assets and assumed certain liabilities of Commodore, including its six manufacturing facilities and two wholly-owned retail locations. In addition to manufacturing, Commodore also participates in commercial lending operations with its dealers. The transaction was accounted for as a business combination and the results of operations have been included in the accompanying Consolidated Financial Statements since the date of acquisition. The acquisition of Commodore brings beneficial geographic addition to our footprint with strong operations in the Northeast/Midwest/Mid-Atlantic markets and provides a platform for future growth, with the potential for cost and revenue synergies. The acquisition-date fair value of the total consideration was $ 156.1 million, which was paid in cash and is subject to future adjustments upon the finalization of closing financial statements. We have expensed $ 2.7 million in acquisition related deal costs in Selling, general and administrative expense in the Consolidated Statements of Comprehensive Income , and have not incurred debt in connection with the purchase or subsequent operations. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date (in thousands). Certain estimated values are not yet finalized and are subject to change, which could be significant. The allocation of the purchase price is still preliminary due to the short duration since the acquisition date and will be finalized upon completion of the analysis of the fair values of Commodore's assets and specified liabilities. We expect to finalize these amounts as soon as possible but no later than one year from the acquisition date. September 24, 2021 Cash $ 619 Accounts receivable 20,930 Commercial loans 30,960 Inventories 31,787 Property, plant and equipment (1) 57,606 Other current assets 534 Intangible assets (2) 18,400 Total identifiable assets acquired 160,836 Accounts payable and accrued liabilities 32,249 Net identifiable assets acquired 128,587 Goodwill (3) 27,464 Net assets acquired $ 156,051 21 Table of Contents (1) Includes assets acquired under finance leases. See Note 9 for additional information. (2) Includes $ 11.8 million assigned to customer-related intangibles, subject to a useful life of 11 years amortized on a straight-line basis; $ 3.8 million assigned to trademarks and trade names, which are considered indefinite lived intangible assets and are not subject to amortization; $ 2.3 million for acquired sales order backlogs that will be amortized over the period to produce the associated backlog; and $ 0.5 million for a covenant not to compete from the sellers, amortized on a straight-line basis over the term of 5 years. (3) Attributable to the Factory-built housing segment, all of which will be deductible for income tax purposes. Since the acquisition date, Commodore contributed Net revenue of $ 4.4 million for the three and six months ended October 2, 2021. Commodore decreased consolidated Net income on the Consolidated Statements of Comprehensive Income for the three and six months ended October 2, 2021 by $ 645,000 . The Net loss from the Commodore acquisition included required purchase accounting adjustments whereby home product inventory is recorded at fair value upon acquisition. Pro Forma Impact of Acquisitions . The following table presents supplemental pro forma information as if the above acquisitions occurred on March 29, 2020 (in thousands, except per share data): Three Months Ended Six Months Ended October 2, 2021 September 26, 2020 October 2, 2021 September 26, 2020 Net revenue $ 444,303 $ 327,491 $ 856,054 $ 635,061 Net income attributable to Cavco common stockholders 38,331 20,665 66,161 37,494 Diluted net income per share 4.13 2.22 7.13 4.04 22. Business Segment Information We operate principally in two segments: (1) factory-built housing, which includes wholesale and retail factory-built housing operations and (2) financial services, which includes manufactured housing consumer finance and insurance. The following table provides selected financial data by segment (in thousands): Three Months Ended Six Months Ended October 2, 2021 September 26, 2020 October 2, 2021 September 26, 2020 Net revenue Factory-built housing $ 342,094 $ 240,967 $ 654,377 $ 479,057 Financial services 17,449 17,009 35,588 33,720 $ 359,543 $ 257,976 $ 689,965 $ 512,777 Income before income taxes Factory-built housing $ 46,893 $ 17,452 $ 80,452 $ 35,902 Financial services 2,128 2,144 4,047 5,374 $ 49,021 $ 19,596 $ 84,499 $ 41,276 October 2, 2021 April 3, 2021 Total assets: Factory-built housing $ 819,879 $ 711,579 Financial services 236,554 240,254 $ 1,056,433 $ 951,833 22 Table of Contents