CAVCO INDUSTRIES, INC. 10-Q

Item 1. Financial Statements CAVCO INDUSTRIES, INC. CONSOLIDATED BALANCE SHEETS (Dollars in thousands, except per share amounts) January 1, 2022 April 3, 2021 ASSETS (Unaudited) Current assets Cash and cash equivalents $ 267,265 $ 322,279 Restricted cash, current 15,542 16,693 Accounts receivable, net 64,536 47,396 Short-term investments 21,116 19,496 Current portion of consumer loans receivable, net 25,397 37,690 Current portion of commercial loans receivable, net 29,308 14,568 Current portion of commercial loans receivable from affiliates, net 217 4,664 Inventories 200,313 131,234 Prepaid expenses and other current assets 79,855 57,779 Total current assets 703,549 651,799 Restricted cash 335 335 Investments 35,377 35,010 Consumer loans receivable, net 30,632 37,108 Commercial loans receivable, net 35,056 20,281 Commercial loans receivable from affiliates, net 2,391 4,801 Property, plant and equipment, net 157,990 96,794 Goodwill 101,945 75,090 Other intangibles, net 28,982 14,363 Operating lease right-of-use assets 15,974 16,252 Total assets $ 1,112,231 $ 951,833 LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST, AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $ 33,756 $ 32,120 Accrued expenses and other current liabilities 238,208 203,133 Current portion of secured financings and other 798 1,851 Total current liabilities 272,762 237,104 Operating lease liabilities 12,482 13,361 Secured financings and other 11,030 10,335 Deferred income taxes 8,541 7,393 Redeemable noncontrolling interest 1,204 — 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 9,289,608 and 9,241,256 shares, respectively 93 92 Treasury stock, at cost; 126,573 and 6,600 shares, respectively ( 30,567 ) ( 1,441 ) Additional paid-in capital 261,596 253,835 Retained earnings 575,132 431,057 Accumulated other comprehensive (loss) income ( 42 ) 97 Total stockholders' equity 806,212 683,640 Total liabilities, redeemable noncontrolling interest and stockholders' equity $ 1,112,231 $ 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 Nine Months Ended January 1, 2022 December 26, 2020 January 1, 2022 December 26, 2020 Net revenue $ 431,714 $ 288,772 $ 1,121,679 $ 801,549 Cost of sales 316,506 229,534 842,530 633,447 Gross profit 115,208 59,238 279,149 168,102 Selling, general and administrative expenses 60,322 35,414 146,526 106,190 Income from operations 54,886 23,824 132,623 61,912 Interest expense ( 209 ) ( 177 ) ( 576 ) ( 567 ) Other income, net 4,258 2,243 11,387 5,821 Income before income taxes 58,935 25,890 143,434 67,166 Income tax benefit (expense) 20,680 ( 6,189 ) 910 ( 15,742 ) Net income 79,615 19,701 144,344 51,424 Less: net income attributable to redeemable noncontrolling interest 196 — 269 — Net income attributable to Cavco common stockholders $ 79,419 $ 19,701 $ 144,075 $ 51,424 Comprehensive income Net income $ 79,615 $ 19,701 $ 144,344 $ 51,424 Reclassification adjustment for securities sold ( 16 ) ( 13 ) ( 15 ) 20 Applicable income taxes 3 3 3 ( 4 ) Net change in unrealized position of investments held ( 127 ) ( 6 ) ( 161 ) 56 Applicable income taxes 27 1 34 ( 12 ) Comprehensive income 79,502 19,686 144,205 51,484 Less: comprehensive income attributable to redeemable noncontrolling interest 196 — 269 — Comprehensive income attributable to Cavco common stockholders $ 79,306 $ 19,686 $ 143,936 $ 51,484 Net income per share attributable to Cavco common stockholders Basic $ 8.66 $ 2.14 $ 15.68 $ 5.60 Diluted $ 8.57 $ 2.12 $ 15.54 $ 5.54 Weighted average shares outstanding Basic 9,174,224 9,190,254 9,187,828 9,182,491 Diluted 9,270,438 9,295,553 9,270,855 9,285,238 See accompanying Notes to Consolidated Financial Statements 2 Table of Contents CAVCO INDUSTRIES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) (Unaudited) Nine Months Ended January 1, 2022 December 26, 2020 OPERATING ACTIVITIES Net income $ 144,344 $ 51,424 Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization 6,750 4,735 Provision for credit losses ( 220 ) ( 1,082 ) Deferred income taxes 1,186 ( 272 ) Stock-based compensation expense 3,460 2,935 Non-cash interest income, net ( 1,115 ) ( 2,984 ) (Gain) loss on sale or retirement of property, plant and equipment, net ( 307 ) 220 Gain on investments and sale of loans, net ( 18,379 ) ( 14,964 ) Changes in operating assets and liabilities, net of acquisitions Accounts receivable 4,366 1,868 Consumer loans receivable originated ( 122,872 ) ( 124,058 ) Proceeds from sales of consumer loans 142,445 122,597 Principal payments received on consumer loans receivable 8,861 10,720 Inventories ( 29,899 ) 2,911 Prepaid expenses and other current assets ( 33,746 ) 10,913 Commercial loans receivable 8,080 6,444 Accounts payable and accrued expenses and other current liabilities 13,013 20,159 Net cash provided by operating activities 125,967 91,566 INVESTING ACTIVITIES Purchases of property, plant and equipment ( 8,938 ) ( 5,816 ) Payments for acquisitions, net ( 141,428 ) — Proceeds from sale of property, plant and equipment 1,291 118 Purchases of investments ( 8,224 ) ( 14,056 ) Proceeds from sale of investments 9,457 14,656 Net cash used in investing activities ( 147,842 ) ( 5,098 ) FINANCING ACTIVITIES Proceeds from exercise of stock options 4,302 469 Proceeds from secured financings and other 47 64 Payments on secured financings and other ( 9,213 ) ( 1,984 ) Payments for common stock repurchases ( 29,126 ) — Distributions to noncontrolling interest ( 300 ) — Net cash used in financing activities ( 34,290 ) ( 1,451 ) Net (decrease) increase in cash, cash equivalents and restricted cash ( 56,165 ) 85,017 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 $ 283,142 $ 340,624 Supplemental disclosures of cash flow information Cash paid for income taxes $ 21,573 $ 13,111 Cash paid for interest $ 302 $ 371 Supplemental disclosures of noncash activity Change in GNMA loans eligible for repurchase $ ( 13,185 ) $ 21,366 Right-of-use assets recognized and operating lease obligations incurred $ 2,455 $ 5,692 Fair value of assets acquired under finance leases $ 7,158 $ — Finance lease obligations incurred $ 6,351 $ — 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 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. 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 45 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 22 . 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 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 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 within Secured financings and other. 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 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 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. 2. Revenue from Contracts with Customers The following table summarizes customer contract revenues disaggregated by reportable segment and source (in thousands): Three Months Ended Nine Months Ended January 1, 2022 December 26, 2020 January 1, 2022 December 26, 2020 Factory-built housing U.S. Housing and Urban Development code homes $ 357,453 $ 222,684 $ 905,790 $ 609,853 Modular homes 30,451 26,059 88,454 67,325 Park model RVs 10,709 8,296 30,108 31,045 Other 14,977 13,783 43,615 41,656 413,590 270,822 1,067,967 749,879 Financial services Insurance agency commissions received from third-party insurance companies 1,304 840 3,027 2,387 All other sources 16,820 17,110 50,685 49,283 18,124 17,950 53,712 51,670 $ 431,714 $ 288,772 $ 1,121,679 $ 801,549 5 Table of Contents 3. Restricted Cash Restricted cash consisted of the following (in thousands): January 1, 2022 April 3, 2021 Cash related to CountryPlace customer payments to be remitted to third parties $ 14,567 $ 16,049 Other restricted cash 1,310 979 15,877 17,028 Less current portion ( 15,542 ) ( 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 on the Consolidated Balance Sheets to the combined amounts shown on the Consolidated Statements of Cash Flows (in thousands): January 1, 2022 December 26, 2020 Cash and cash equivalents $ 267,265 $ 327,487 Restricted cash 15,877 13,137 $ 283,142 $ 340,624 4. Investments Investments consisted of the following (in thousands): January 1, 2022 April 3, 2021 Available-for-sale debt securities $ 17,101 $ 14,946 Marketable equity securities 19,100 17,600 Non-marketable equity investments 20,292 21,960 56,493 54,506 Less short-term investments ( 21,116 ) ( 19,496 ) $ 35,377 $ 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). January 1, 2022 April 3, 2021 Amortized Cost Fair Value Amortized Cost Fair Value Residential mortgage-backed securities $ 2,165 $ 2,157 $ 2,787 $ 2,804 State and political subdivision debt securities 7,521 7,538 7,239 7,345 Corporate debt securities 7,469 7,406 4,797 4,797 $ 17,155 $ 17,101 $ 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. January 1, 2022 Amortized Cost Fair Value Due in less than one year $ 1,604 $ 1,608 Due after one year through five years 11,473 11,353 Due after five years through ten years 1,264 1,307 Due after ten years 649 676 Mortgage-backed securities 2,165 2,157 $ 17,155 $ 17,101 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 Nine Months Ended January 1, 2022 December 26, 2020 January 1, 2022 December 26, 2020 Marketable equity securities Net gain recognized during the period $ 2,967 $ 2,008 $ 4,906 $ 5,289 Less: 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 5. Inventories Inventories consisted of the following (in thousands): January 1, 2022 April 3, 2021 Raw materials $ 84,963 $ 54,336 Work in process 27,357 19,149 Finished goods 87,993 57,749 $ 200,313 $ 131,234 7 Table of Contents 6. Consumer Loans Receivable The following table summarizes consumer loans receivable (in thousands): January 1, 2022 April 3, 2021 Loans held for investment, previously securitized $ 27,332 $ 31,949 Loans held for investment 14,835 18,690 Loans held for sale 11,746 15,587 Construction advances 5,377 13,801 59,290 80,027 Deferred financing fees and other, net ( 874 ) ( 2,041 ) Allowance for loan losses ( 2,387 ) ( 3,188 ) 56,029 74,798 Less current portion ( 25,397 ) ( 37,690 ) $ 30,632 $ 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 Nine Months Ended January 1, 2022 December 26, 2020 January 1, 2022 December 26, 2020 Allowance for loan losses at beginning of period $ 2,799 $ 3,910 $ 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 ( 327 ) ( 491 ) ( 384 ) ( 424 ) Charge-offs ( 85 ) — ( 417 ) ( 200 ) Allowance for loan losses at end of period $ 2,387 $ 3,419 $ 2,387 $ 3,419 The consumer loans held for investment had the following characteristics: January 1, 2022 April 3, 2021 Weighted average contractual interest rate 8.4 % 8.3 % Weighted average effective interest rate 8.9 % 9.3 % Weighted average months to maturity 151 162 8 Table of Contents The following table is a consolidated summary of the delinquency status of the outstanding amortized cost of consumer loans receivable (in thousands): January 1, 2022 April 3, 2021 Current $ 56,141 $ 76,378 31 to 60 days 413 508 61 to 90 days 1,964 21 91+ days 772 3,120 $ 59,290 $ 80,027 The following tables disaggregate gross consumer loans receivable by credit quality indicator and fiscal year of origination (in thousands): January 1, 2022 2022 2021 2020 2019 2018 Prior Total Prime- FICO score 680 and greater $ 10,825 $ 2,023 $ 2,604 $ 1,348 $ 759 $ 21,683 $ 39,242 Near Prime- FICO score 620-679 1,973 2,138 1,275 1,846 1,229 9,734 18,195 Sub-Prime- FICO score less than 620 23 21 52 — — 1,363 1,459 No FICO score — — — 27 — 367 394 $ 12,821 $ 4,182 $ 3,931 $ 3,221 $ 1,988 $ 33,147 $ 59,290 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 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. 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): January 1, 2022 April 3, 2021 Loans receivable $ 68,218 $ 45,377 Allowance for loan losses ( 1,130 ) ( 816 ) Deferred financing fees, net ( 116 ) ( 247 ) 66,972 44,314 Less current portion of commercial loans receivable (including from affiliates), net ( 29,525 ) ( 19,232 ) $ 37,447 $ 25,082 The commercial loans receivable balance had the following characteristics: January 1, 2022 April 3, 2021 Weighted average contractual interest rate 6.3 % 6.4 % Weighted average months outstanding 9 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 Nine Months Ended January 1, 2022 December 26, 2020 January 1, 2022 December 26, 2020 Balance at beginning of period $ 826 $ 789 $ 816 $ 393 Impact of adoption of ASU 2016-13 — — — 435 Change in estimated loan losses, net 304 ( 24 ) 314 ( 63 ) Balance at end of period $ 1,130 $ 765 $ 1,130 $ 765 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): January 1, 2022 2022 2021 2020 2019 2018 Prior Total Performing $ 46,755 $ 13,529 $ 4,818 $ 2,050 $ 605 $ 461 $ 68,218 April 3, 2021 2021 2020 2019 2018 2017 Prior Total Performing $ 30,627 $ 8,677 $ 3,206 $ 1,864 $ 1,003 $ — $ 45,377 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 commercial loans receivable as of January 1, 2022 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 January 1, 2022 and April 3, 2021, respectively . 8. Property, Plant and Equipment, net Property, plant and equipment, net, consisted of the following (in thousands): January 1, 2022 April 3, 2021 Property, plant and equipment, at cost Land $ 32,767 $ 28,314 Buildings and improvements 119,078 71,827 Machinery and equipment 49,176 34,146 201,021 134,287 Accumulated depreciation ( 43,031 ) ( 37,493 ) $ 157,990 $ 96,794 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. See Note 9 for further information. 9. Leases We lease certain production and retail locations, office space and equipment. 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, 2021 ROU assets Operating lease assets Operating lease right-of-use assets $ 15,974 $ 16,252 Finance lease assets Property, plant and equipment, net (1) 7,114 986 Total lease assets $ 23,088 $ 17,238 Lease Liabilities Current: Operating lease liabilities Accrued expenses and other current liabilities $ 4,773 $ 4,184 Finance lease liabilities Current portion of secured financings and other 347 71 Non-current: Operating lease liabilities Operating lease liabilities 12,482 13,361 Finance lease liabilities Secured financings and other 5,986 233 Total lease liabilities $ 23,588 $ 17,849 (1) Recorded net of accumulated amortization of $ 44,000 and $ 143,000 as of January 1, 2022 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 January 1, 2022 was as follows (in thousands): Operating Leases Finance Leases Total Remainder of 2022 $ 1,225 $ 89 $ 1,314 2023 4,748 356 5,104 2024 4,210 356 4,566 2025 3,188 356 3,544 2026 3,133 356 3,489 2027 1,086 356 1,442 Thereafter 1,439 10,941 12,380 19,029 12,810 31,839 Less amount representing interest ( 1,774 ) ( 6,477 ) ( 8,251 ) 17,255 6,333 23,588 Less current portion ( 4,773 ) ( 347 ) ( 5,120 ) $ 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 January 1, 2022 : Remaining Lease Term (Years) Discount Rate Operating leases 4.6 4.5 % Finance leases 35.9 4.5 % 10. Goodwill and Other Intangibles Goodwill and other intangibles, net, consisted of the following (in thousands): January 1, 2022 April 3, 2021 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Indefinite-lived Goodwill $ 101,945 $ — $ 101,945 $ 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 — 1,100 118,725 — 118,725 85,090 — 85,090 Finite-lived Customer relationships 19,500 ( 7,902 ) 11,598 11,300 ( 7,097 ) 4,203 Other 1,924 ( 1,320 ) 604 1,424 ( 1,264 ) 160 $ 140,149 $ ( 9,222 ) $ 130,927 $ 97,814 $ ( 8,361 ) $ 89,453 12 Table of Contents 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. Balance at beginning of period $ 75,090 Goodwill recognized on Craftsman acquisition 4,363 Goodwill recognized on Commodore acquisition 22,492 Balance at end of period $ 101,945 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): Remainder of fiscal year $ 1,233 2023 1,679 2024 1,339 2025 1,300 2026 1,258 2027 1,135 Thereafter 4,258 11. Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consisted of the following (in thousands): January 1, 2022 April 3, 2021 Customer deposits $ 55,408 $ 41,835 Salaries, wages and benefits 46,237 37,737 Estimated warranties 26,234 18,032 Unearned insurance premiums 23,562 22,643 Accrued volume rebates 20,978 12,132 Company repurchase options on certain loans sold 12,731 25,938 Other 53,058 44,816 $ 238,208 $ 203,133 12. Warranties Activity in the liability for estimated warranties was as follows (in thousands): Three Months Ended Nine Months Ended January 1, 2022 December 26, 2020 January 1, 2022 December 26, 2020 Balance at beginning of period $ 25,745 $ 17,805 $ 18,032 $ 18,678 Purchase accounting additions — — 6,928 — Charged to costs and expenses 10,883 7,724 28,002 20,303 Payments and deductions ( 10,394 ) ( 7,533 ) ( 26,728 ) ( 20,985 ) Balance at end of period $ 26,234 $ 17,996 $ 26,234 $ 17,996 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): January 1, 2022 April 3, 2021 Finance lease obligations $ 6,333 $ 304 Other secured financings 3,024 3,672 Mandatorily redeemable noncontrolling interest 2,471 — Secured term loans — 8,210 11,828 12,186 Less current portion ( 798 ) ( 1,851 ) $ 11,030 $ 10,335 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. 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. The effects of reinsurance on premiums written and earned were as follows (in thousands): Three Months Ended January 1, 2022 December 26, 2020 Written Earned Written Earned Direct premiums $ 6,380 $ 6,557 $ 5,420 $ 5,429 Assumed premiums—nonaffiliated 7,023 7,822 6,541 7,195 Ceded premiums—nonaffiliated ( 3,866 ) ( 3,866 ) ( 3,146 ) ( 3,146 ) $ 9,537 $ 10,513 $ 8,815 $ 9,478 Nine Months Ended January 1, 2022 December 26, 2020 Written Earned Written Earned Direct premiums $ 19,529 $ 18,876 $ 16,100 $ 15,759 Assumed premiums—nonaffiliated 23,837 22,830 21,787 21,028 Ceded premiums—nonaffiliated ( 11,227 ) ( 11,227 ) ( 9,201 ) ( 9,201 ) $ 32,139 $ 30,479 $ 28,686 $ 27,586 14 Table of Contents 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 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 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 January 1, 2022 December 26, 2020 January 1, 2022 December 26, 2020 Balance at beginning of period $ 7,350 $ 6,887 $ 7,451 $ 5,582 Net incurred losses during the year 5,046 4,070 20,303 17,529 Net claim payments during the year ( 4,916 ) ( 5,606 ) ( 20,274 ) ( 17,760 ) Balance at end of period $ 7,480 $ 5,351 $ 7,480 $ 5,351 15. Income Taxes 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. 16. 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 $ 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. 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): January 1, 2022 April 3, 2021 Construction loan contract amount $ 14,271 $ 37,628 Cumulative advances ( 5,377 ) ( 13,801 ) $ 8,894 $ 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 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 . 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 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 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. 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. 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 on 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 17. 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 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 (loss) 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 loss, 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 loss, 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 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 17 Table of Contents 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 (loss) Total Common Stock Shares Amount Balance, March 28, 2020 9,173,242 $ 92 $ — $ 252,260 $ 355,144 $ 90 $ 607,586 Cumulative effect of implementing ASU 2016-13, net — — — — ( 733 ) — ( 733 ) Net income — — — — 16,674 — 16,674 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 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 18. 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 Nine Months Ended January 1, 2022 December 26, 2020 January 1, 2022 December 26, 2020 Net income attributable to Cavco common stockholders $ 79,419 $ 19,701 $ 144,075 $ 51,424 Weighted average shares outstanding Basic 9,174,224 9,190,254 9,187,828 9,182,491 Effect of dilutive securities 96,214 105,299 83,027 102,747 Diluted 9,270,438 9,295,553 9,270,855 9,285,238 Net income per share attributable to Cavco common stockholders Basic $ 8.66 $ 2.14 $ 15.68 $ 5.60 Diluted $ 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 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. 18 Table of Contents 19. Fair Value Measurements The book value and estimated fair value of our financial instruments were as follows (in thousands): January 1, 2022 April 3, 2021 Book Value Estimated Fair Value Book Value Estimated Fair Value Available-for-sale debt securities $ 17,101 $ 17,101 $ 14,946 $ 14,946 Marketable equity securities 19,100 19,100 17,600 17,600 Non-marketable equity investments 20,292 20,292 21,960 21,960 Consumer loans receivable 56,029 60,301 74,798 86,209 Commercial loans receivable 66,972 65,347 44,314 42,379 Secured financings and other ( 11,828 ) ( 12,019 ) ( 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. January 1, 2022 April 3, 2021 Number of loans serviced with MSRs 4,407 4,647 Weighted average servicing fee (basis points) 34.76 33.57 Capitalized servicing multiple 72.9 % 45.9 % Capitalized servicing rate (basis points) 25.33 15.42 Serviced portfolio with MSRs (in thousands) $ 570,639 $ 593,939 MSRs (in thousands) $ 1,446 $ 916 20. 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 $ 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. 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 21. 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 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. 22. 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 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. 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 416 Intangible assets (1) 2,980 Total identifiable assets acquired 18,021 Accounts payable and accrued liabilities 10,028 Net identifiable assets acquired 7,993 Goodwill (2) 4,363 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 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 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 $ 146.2 million, which was paid in cash and is subject to future adjustments upon the finalization of closing financial statements. 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. 21 Table of Contents 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 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. September 24, 2021 Cash $ 619 Accounts receivable 20,930 Commercial loans 30,922 Inventories 31,787 Property, plant and equipment (1) 58,942 Other current assets 534 Intangible assets (2) 12,500 Total identifiable assets acquired 156,234 Accounts payable and accrued liabilities 32,556 Net identifiable assets acquired 123,678 Goodwill (3) 22,492 Net assets acquired $ 146,170 (1) Includes assets acquired under finance leases. See Note 9 for additional information. (2) Includes $ 7.2 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; $ 1.0 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 $ 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 Nine Months Ended January 1, 2022 December 26, 2020 January 1, 2022 December 26, 2020 Net revenue $ 431,714 $ 355,844 $ 1,287,768 $ 990,906 Net income attributable to Cavco common stockholders 79,419 20,440 146,828 57,973 Diluted net income per share 8.57 2.20 15.84 6.24 22 Table of Contents 23. 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 Nine Months Ended January 1, 2022 December 26, 2020 January 1, 2022 December 26, 2020 Net revenue Factory-built housing $ 413,590 $ 270,822 $ 1,067,967 $ 749,879 Financial services 18,124 17,950 53,712 51,670 $ 431,714 $ 288,772 $ 1,121,679 $ 801,549 Income before income taxes Factory-built housing $ 52,905 $ 18,752 $ 133,357 $ 54,654 Financial services 6,030 7,138 10,077 12,512 $ 58,935 $ 25,890 $ 143,434 $ 67,166 January 1, 2022 April 3, 2021 Total assets: Factory-built housing $ 887,553 $ 711,579 Financial services 224,678 240,254 $ 1,112,231 $ 951,833 23 Table of Contents