What changed in this filing

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Item 1. Financial Statements

2022-02-07 compared with 2021-11-05 · 153 added, 133 removed, 622 unchanged (31% of the section changed)

48 unchanged sentences

Retained earnings 575,132 431,057

Accumulated other comprehensive income 71 97

Accumulated other comprehensive (loss) income ( 42 ) 97

Total stockholders' equity 806,212 683,640

4 unchanged sentences

(Dollars in thousands, except per share amounts)

Three Months Ended Six Months Ended

2021 September 26,

2020 October 2,

2021 September 26,

Three Months Ended Nine Months Ended

2022 December 26,

2020 January 1,

2022 December 26,

$ 431,714 $ 288,772 $ 1,121,679 $ 801,549

12 unchanged sentences

58,935 25,890 143,434 67,166

Income tax expense

( 11,338 ) ( 4,547 ) ( 19,770 ) ( 9,553 )

Income tax benefit (expense) 20,680 ( 6,189 ) 910 ( 15,742 )

79,615 19,701 144,344 51,424

5 unchanged sentences

Applicable income taxes

— ( 2 ) — ( 7 )

Net change in unrealized position of investments held

15 unchanged sentences

(Dollars in thousands)

Six Months Ended

2021 September 26,

Nine Months Ended

2022 December 26,

OPERATING ACTIVITIES

26 unchanged sentences

FINANCING ACTIVITIES

Proceeds from (payments for) exercise of stock options 2,865 ( 11 )

Proceeds from exercise of stock options 4,302 469

Proceeds from secured financings and other 47 64

22 unchanged sentences

generally accepted accounting principles ("GAAP") have been condensed or omitted pursuant to such rules and regulations.

In addition, references throughout to numbered "Notes" refer to these Notes to Consolidated Financial Statements, unless otherwise stated.

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.

21 unchanged sentences

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.

Craftsman is a manufactured home 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.

1 unchanged sentence

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.

We accounted for this transaction as a business combination achieved in stages (see Note 22) 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.

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 Craftsman Purchase 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.

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 on the Consolidated Balance Sheet under the Redeemable noncontrolling interest caption.

The amount of income attributable to this noncontrolling interest is included on the face of the Consolidated Statements of Comprehensive Income.

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,

Three Months Ended Nine Months Ended

January 1, 2022 December 26, 2020 January 1,

2022 December 26,

Factory-built housing

10 unchanged sentences

1,304 840 3,027 2,387

Other 16,599 16,232 33,865 32,173

All other sources 16,820 17,110 50,685 49,283

18,124 17,950 53,712 51,670

8 unchanged sentences

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):

2021 September 26,

The following table provides a reconciliation of Cash and cash equivalents and Restricted cash reported on the Consolidated Balance Sheets to the combined amounts shown on the Consolidated Statements of Cash Flows (in thousands):

2022 December 26,

Cash and cash equivalents $ 267,265 $ 327,487

9 unchanged sentences

56,493 54,506

Less current portion ( 18,867 ) ( 19,496 )

Less short-term investments ( 21,116 ) ( 19,496 )

$ 35,377 $ 35,010

2 unchanged sentences

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

January 1, 2022 April 3, 2021

Value Amortized Cost Fair

8 unchanged sentences

Expected maturities differ from contractual maturities as borrowers may have the right to call or prepay obligations, with or without penalties.

October 2, 2021

January 1, 2022

Due in less than one year $ 1,604 $ 1,608

4 unchanged sentences

$ 17,155 $ 17,101

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 .

Gross gains realized on the sale of available-for-sale debt securities during the three and nine months ended January 1, 2022 were $ 2,000 , and there were no gross losses.

For the three and nine months ended December 26, 2020, there were no gross gains realized on the sale of available-for-sale debt securities and gross losses realized were $ 1,000 and $ 6,000 respectively.

Net investment gains and losses on marketable equity securities were as follows (in thousands):

Three Months Ended Six Months Ended

2021 September 26,

2020 October 2,

2021 September 26,

Three Months Ended Nine Months Ended

2022 December 26,

2020 January 1,

2022 December 26,

Marketable equity securities

Net gain recognized during the period $ 2,967 $ 2,008 $ 4,906 $ 5,289

Net (gains) losses recognized on securities sold during the period ( 143 ) 27 ( 279 ) ( 6 )

Net gains recognized on securities sold during the period ( 257 ) ( 151 ) ( 536 ) ( 157 )

Unrealized gains recognized during the period on securities still held $ 2,710 $ 1,857 $ 4,370 $ 5,132

19 unchanged sentences

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

2021 September 26,

2020 October 2,

2021 September 26,

Three Months Ended Nine Months Ended

2022 December 26,

2020 January 1,

2022 December 26,

Allowance for loan losses at beginning of period $ 2,799 $ 3,910 $ 3,188 $ 1,767

17 unchanged sentences

The following tables disaggregate gross consumer loans receivable by credit quality indicator and fiscal year of origination (in thousands):

October 2, 2021

January 1, 2022

2022 2021 2020 2019 2018 Prior Total

19 unchanged sentences

$ 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.

As of January 1, 2022 and April 3, 2021, 41 % and 35 % of the outstanding principal balance of the consumer loans receivable portfolio was concentrated in Texas, respectively, and 16 % and 20 % was concentrated in Florida, respectively.

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 January 1, 2022 or April 3, 2021.

Repossessed homes totaled approximately $ 404,000 and $ 518,000 as of January 1, 2022 and April 3, 2021, respectively, and are included in Prepaid expenses and other current assets on the Consolidated Balance Sheets.

Foreclosure or similar proceedings in progress totaled approximately $ 813,000 and $ 1.1 million as of January 1, 2022 and April 3, 2021, respectively.

Commercial Loans Receivable

13 unchanged sentences

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

2021 September 26,

2020 October 2,

2021 September 26,

Three Months Ended Nine Months Ended

2022 December 26,

2020 January 1,

2022 December 26,

Balance at beginning of period

5 unchanged sentences

$ 1,130 $ 765 $ 1,130 $ 765

As of October 2, 2021 and April 3, 2021, there were no commercial loans considered watch list or nonperforming.

As of January 1, 2022 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

January 1, 2022

2022 2021 2020 2019 2018 Prior Total

3 unchanged sentences

$ 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.

At January 1, 2022, 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 January 1, 2022, 20 % of our outstanding commercial loans receivable principal balance was concentrated in Pennsylvania and 13 % was concentrated in New York.

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.

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 .

No other state had concentrations in excess of 10 % of the principal balance of the commercial loans receivable as of January 1, 2022 or April 3, 2021.

Property, Plant and Equipment, net

8 unchanged sentences

$ 157,990 $ 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.

Depreciation expense for the three months ended January 1, 2022 and December 26, 2020 was $ 3.0 million and $ 1.4 million, respectively.

Depreciation expense for the nine months ended January 1, 2022 and December 26, 2020 was $ 5.9 million and $ 4.2 million, respectively.

Included in the balances above are certain assets under finance leases.

1 unchanged sentence

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,

During the period ended January 1, 2022, 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 on the Consolidated Balance Sheets as of January 1, 2022 and April 3, 2021 (in thousands):

Classification January 1,

2022 April 3,

5 unchanged sentences

Operating lease liabilities Accrued expenses and other current liabilities $ 4,773 $ 4,184

Finance lease liabilities Current portion of secured credit facilities and other

Finance lease liabilities Current portion of secured financings and other 347 71

Operating lease liabilities Operating lease liabilities 12,482 13,361

Finance lease liabilities Secured credit facilities and other 5,923 233

Finance lease liabilities Secured financings and other 5,986 233

Total lease liabilities $ 23,588 $ 17,849

(1) Recorded net of accumulated amortization of $ 149,000 and $ 143,000 as of October 2, 2021 and April 3, 2021, respectively.

The present value of minimum payments for future fiscal years under non-cancelable leases as of October 2, 2021 was as follows (in thousands):

(1) Recorded net of accumulated amortization of $ 44,000 and $ 143,000 as of January 1, 2022 and April 3, 2021, respectively.

The present value of minimum payments for future fiscal years under non-cancelable leases as of January 1, 2022 was as follows (in thousands):

Operating Leases Finance Leases Total

11 unchanged sentences

$ 12,482 $ 5,986 $ 18,468

The following table provides information about the weighted average remaining lease terms and weighted average discount rates as of October 2, 2021 :

The following table provides information about the weighted average remaining lease terms and weighted average discount rates as of January 1, 2022 :

Remaining Lease Term (Years) Discount Rate

3 unchanged sentences

Goodwill and other intangibles, net, consisted of the following (in thousands):

October 2, 2021 April 3, 2021

January 1, 2022 April 3, 2021

Amount Accumulated

12 unchanged sentences

$ 140,149 $ ( 9,222 ) $ 130,927 $ 97,814 $ ( 8,361 ) $ 89,453

Changes in the carrying amount of Goodwill were as follows for the six months ended October 2, 2021 (in thousands).

Changes in the carrying amount of Goodwill were as follows for the nine months ended January 1, 2022 (in thousands).

See Note 22 for further information.

3 unchanged sentences

Balance at end of period

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.

Amortization expense recognized on intangible assets was $ 523,000 and $ 186,000 for the three months ended January 1, 2022 and December 26, 2020, respectively.

Amortization expense recognized on intangible assets was $ 862,000 and $ 560,000 for the nine months ended January 1, 2022 and December 26, 2020, respectively.

Expected amortization for future fiscal years is as follows (in thousands):

13 unchanged sentences

Activity in the liability for estimated warranties was as follows (in thousands):

Three Months Ended Six Months Ended

2021 September 26,

2020 October 2,

2021 September 26,

Three Months Ended Nine Months Ended

2022 December 26,

2020 January 1,

2022 December 26,

Balance at beginning of period $ 25,745 $ 17,805 $ 18,032 $ 18,678

6 unchanged sentences

2022 April 3,

Secured term loan $ 7,718 $ 8,210

Finance lease obligations $ 6,333 $ 304

1 unchanged sentence

Mandatorily redeemable noncontrolling interest 2,471 —

Secured term loans — 8,210

11,828 12,186

1 unchanged sentence

$ 11,030 $ 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 %.

We previously entered into secured credit facilities with independent third-party banks to originate and hold consumer home-only loans secured by manufactured homes.

Those facilities were then converted into amortizing loans, which were paid in full as of January 1, 2022.

Reinsurance and Insurance Loss Reserves

3 unchanged sentences

Three Months Ended

October 2, 2021 September 26, 2020

January 1, 2022 December 26, 2020

Written Earned Written Earned

6 unchanged sentences

$ 9,537 $ 10,513 $ 8,815 $ 9,478

Six Months Ended

October 2, 2021 September 26, 2020

Nine Months Ended

January 1, 2022 December 26, 2020

Written Earned Written Earned

7 unchanged sentences

Typical insurance policies written or assumed have a maximum coverage of $ 300,000 per claim, of which we cede $ 125,000 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.

Therefore, our risk of loss is limited to the first $ 175,000 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 $ 70 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

2021 September 26,

2020 October 2,

2021 September 26,

Standard Casualty establishes reserves for claims and related expenses on reported and unreported non-reinsured losses.

Reserves for claims are included in the Accrued expenses and other current liabilities line item on the Consolidated Balance Sheet and claims expenses is recorded in Cost of sales on the Consolidated Statement of Comprehensive Income.

The following details the activity in the reserve for the nine months ended January 1, 2022 and December 26, 2020 (in thousands):

Three Months Ended Nine Months Ended

2022 December 26,

2020 January 1,

2022 December 26,

Balance at beginning of period $ 7,350 $ 6,887 $ 7,451 $ 5,582

2 unchanged sentences

Balance at end of period $ 7,480 $ 5,351 $ 7,480 $ 5,351

For the three and nine months ended January 1, 2022, income taxes resulted in a benefit of $ 20.7 million and $ 0.9 million, respectively.

This is due to $ 34.4 million of estimated non-recurring net tax credits related to the sale of energy efficient homes between fiscal year 2018 and fiscal third quarter 2022 available under the Internal Revenue Code §45L.

Of this amount, $ 4.0 million is related to fiscal year 2022.

A receivable for the refunds related to the net tax credits is recorded in Prepaid expenses and other current assets.

This credit was initially established under the Federal Energy Policy Act of 2005 and most recently extended in the Consolidated Appropriations Act, 2021.

The credit expired in its current format as of December 31, 2021.

The Company determined eligibility for the program in consultation with third-party qualified experts and recognized the benefit for the five eligible years in the fiscal third quarter of 2022.

Excluding these credits, the effective income tax rate was consistent between periods.

Commitments and Contingencies

2 unchanged sentences

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.

The maximum amount for which we were liable under such agreements approximated $ 117.3 million and $ 74.2 million at January 1, 2022 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 $ 3.2 million at January 1, 2022 and $ 2.3 million at April 3, 2021.

Construction-Period Mortgages.

12 unchanged sentences

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.

This reserve of $ 1.2 million as of January 1, 2022 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 nine months ended January 1, 2022.

Interest Rate Lock Commitments .

1 unchanged sentence

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.

As of January 1, 2022, we had outstanding IRLCs with a notional amount of $ 29.7 million.

During the three months ended January 1, 2022, there were no gains or losses on outstanding IRLCs, and we recognized non-cash gains of $ 57,000 during the three months ended December 26, 2020 .

For the nine months ended January 1, 2022 and December 26, 2020, w e recognized gains of $ 42,000 and losses of $ 87,000 , 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.

As of January 1, 2022, we had $ 21.5 million in outstanding Commitments.

We recognized non-cash losses of $ 61,000 and $ 318,000 for the three months ended January 1, 2022 and December 26, 2020, respectively.

During the nine months ended January 1, 2022 and December 26, 2020, we recognized losses of $ 329,000 and gains of $ 816,000 , respectively.

Legal Matters.

2 unchanged sentences

The SEC action follows an investigation that began in 2018.

The Company filed a summary judgment to dismiss on November 2, 2021.

On November 2, 2021, the Company filed a motion to dismiss the claim.

On January 25, 2022, the court denied the motion to dismiss and the matter is now proceeding to discovery.

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.

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):

The following table represents changes in stockholders' equity attributable to Cavco's stockholders and redeemable noncontrolling interest for each quarterly period during the nine months ended January 1, 2022 (dollars in thousands):

Equity Attributable to Cavco Stockholders

Treasury Stock Additional paid-in capital Retained earnings Accumulated other comprehensive income Total Redeemable Noncontrolling Interest

Treasury Stock Additional paid-in capital Retained earnings Accumulated other comprehensive income (loss) Total Redeemable Noncontrolling Interest

Shares Amount

1 unchanged sentence

Net income — — — — 27,046 — 27,046 —

Other comprehensive income, net — — — — — ( 13 ) ( 13 ) —

Other comprehensive loss, net — — — — — ( 13 ) ( 13 ) —

Issuance of common stock under stock incentive plans 4,465 — — 136 — — 136 —

4 unchanged sentences

Net income — — — — 37,610 — 37,610 73

Other comprehensive income, net — — — — — ( 13 ) ( 13 ) —

Other comprehensive loss, net — — — — — ( 13 ) ( 13 ) —

Issuance of common stock under stock incentive plans 29,295 1 — 2,728 — — 2,729 —

3 unchanged sentences

Balance, October 2, 2021 9,275,016 $ 93 $ ( 21,877 ) $ 259,116 $ 495,713 $ 71 $ 733,116 $ 1,128

Net income — — — — 79,419 — 79,419 196

Other comprehensive loss, net — — — — — ( 113 ) ( 113 ) —

Issuance of common stock under stock incentive plans 14,592 — — 1,437 — — 1,437 —

Stock-based compensation — — — 1,043 — — 1,043 —

Common stock repurchases — — ( 8,690 ) — — — ( 8,690 ) —

Distributions — — — — — — — ( 120 )

Balance, January 1, 2022 9,289,608 $ 93 $ ( 30,567 ) $ 261,596 $ 575,132 $ ( 42 ) $ 806,212 $ 1,204

The following table represents changes in stockholders' equity attributable to Cavco's stockholders for each quarterly period during the nine months ended December 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

Treasury Stock Additional paid-in capital Retained earnings Accumulated other comprehensive income (loss) Total

Shares Amount

11 unchanged sentences

Balance, September 26, 2020 9,188,162 $ 92 $ — $ 254,297 $ 386,134 $ 165 $ 640,688

Net income — — — — 19,701 — 19,701

Other comprehensive loss, net — — — — — ( 15 ) ( 15 )

Issuance of common stock under stock incentive plans 4,075 — — 480 — — 480

Stock-based compensation — — — 887 — — 887

Balance, December 26, 2020 9,192,237 $ 92 $ — $ 255,664 $ 405,835 $ 150 $ 661,741

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

2021 September 26,

2020 October 2,

2021 September 26,

Three Months Ended Nine Months Ended

2022 December 26,

2020 January 1,

2022 December 26,

Net income attributable to Cavco common stockholders $ 79,419 $ 19,701 $ 144,075 $ 51,424

7 unchanged sentences

$ 8.57 $ 2.12 $ 15.54 $ 5.54

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.

Anti-dilutive common stock equivalents excluded from the computation of diluted earnings per share for the three months ended January 1, 2022 and December 26, 2020 were 1,640 and 26,601 , respectively.

Anti-dilutive common stock equivalents excluded from the computation of diluted earnings per share for the nine months ended January 1, 2022 and December 26, 2020 were 2,449 and 26,357 , respectively.

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

January 1, 2022 April 3, 2021

Value Estimated

24 unchanged sentences

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.

Expenses related to the TSA totaled $ 15.3 million and $ 16.7 million for the three and nine months ended January 1, 2022, respectively.

Commodore participates in the IAM National Pension Fund, a multiemployer defined benefit plan.

7 unchanged sentences

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.

For the three and nine months ended January 1, 2022, the total amount of sales to non-consolidated related parties was $ 15.8 million and $ 44.6 million, respectively.

For the three and nine months ended December 26, 2020, the total amount of sales to non-consolidated related parties was $ 11.2 million and $ 34.2 million, respectively.

As of January 1, 2022, receivables from non-consolidated related parties included $ 3.3 million of accounts receivable and $ 2.6 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.

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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.

As a result of the remeasurement, we recorded a gain of $ 3.3 million in Other income, net on 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.

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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.

As 20 % of this is considered mandatorily redeemable per the Craftsman Purchase 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 within Secured financings and other.

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 on the Consolidated Balance Sheet as Redeemable noncontrolling interest.

Since the acquisition date, Craftsman contributed Net revenue of $ 4.5 million and $ 9.0 million for the three and nine months ended January 1, 2022, respectively.

Craftsman contributed Net income of $ 654,000 and $ 897,000 for the three and nine months ended January 1, 2022, respectively.

Cost of sales from the Craftsman acquisition included required purchase accounting adjustments whereby home product inventory is recorded at fair value upon acquisition.

Commodore Homes Acquisition

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The acquisition-date fair value of the total consideration was $ 146.2 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.

During the third quarter certain adjustments were made to these closing financial statements, which resulted in changes to the purchase price allocation and impacted the amount of goodwill recognized.

We have expensed $ 2.7 million in acquisition related deal costs in Selling, general and administrative expenses o n 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

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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.

The allocation of the purchase price is still preliminary due to the time between the acquisition date and reporting date and will be finalized upon completion of the analysis of the fair values of Commodore's acquired assets, liabilities and intangible assets.

We expect to finalize these amounts as soon as possible but no later than one year from the acquisition date.

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(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.

Since the acquisition date, Commodore contributed Net revenue of $ 73.1 million and $ 77.5 million for the three and nine months ended January 1, 2022, respectively.

Commodore contributed Net income of $ 2.5 million and $ 1.8 million for the three and nine months ended January 1, 2022, respectively.

Cost of sales 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

2021 September 26,

2020 October 2,

2021 September 26,

Three Months Ended Nine Months Ended

2022 December 26,

2020 January 1,

2022 December 26,

Net revenue $ 431,714 $ 355,844 $ 1,287,768 $ 990,906

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The following table provides selected financial data by segment (in thousands):

Three Months Ended Six Months Ended

2021 September 26,

2020 October 2,

2021 September 26,

Three Months Ended Nine Months Ended

2022 December 26,

2020 January 1,

2022 December 26,

Factory-built housing $ 413,590 $ 270,822 $ 1,067,967 $ 749,879

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements