CAVCO INDUSTRIES, INC. 10-K

ITEM 9A. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures The Company carried out an evaluation, under the supervision and with the participation of the Company's management, including its President and Chief Executive Officer and its Chief Financial Officer, of the effectiveness of its disclosure controls and procedures (as defined in the Exchange Act Rules 13a-15(e) and 15d-15(e)). Based upon that evaluation, the Company's President and Chief Executive Officer and its Chief Financial Officer concluded that, as of March 30, 2024, its disclosure controls and procedures were effective. 41 Table of Contents Management's Report on Internal Control Over Financial Reporting The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the Company's assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in conformity with U.S. generally accepted accounting principles, and that the Company's receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on the financial statements. Because of its inherent limitations, the Company's controls and procedures may not prevent or detect misstatements. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the controls system are met. Because of the inherent limitations in all controls systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. Management assessed the effectiveness of the Company's internal control over financial reporting based on the criteria in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the "2013 framework"). Based on management's evaluation under the criteria in the 2013 framework, management concluded that the Company's internal control over financial reporting was effective as of March 30, 2024. The effectiveness of the Company's internal control over financial reporting as of March 30, 2024 has been audited by RSM US LLP, an independent registered public accounting firm, as stated in their report, which appears herein. Changes in Internal Control over Financial Reporting There have been no changes in the Company's internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) that occurred during the fiscal quarter ended March 30, 2024, which have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting. 42 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and the Board of Directors of Cavco Industries, Inc. Opinion on the Internal Control Over Financial Reporting We have audited Cavco Industries, Inc.'s (the Company) internal control over financial reporting as of March 30, 2024, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of March 30, 2024, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of March 30, 2024 and April 1, 2023, and the related consolidated statements of comprehensive income, stockholders’ equity and redeemable noncontrolling interest, and cash flows for each of the three fiscal years in the period ended March 30, 2024, and the related notes of the Company and our report dated May 24, 2024 expressed an unqualified opinion. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting in the accompanying Management Report on Internal Controls Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company's assets that could have a material effect on the financial statements. 43 Table of Contents Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ RSM US LLP Phoenix, Arizona May 24, 2024 44 Table of Contents ITEM 9B. OTHER INFORMATION Rule 10b5-1 Trading Plans A portion of the compensation of our executive officers is delivered in the form of deferred equity awards, including time and performance-based restricted stock unit awards. This compensation design is intended to align our executive compensation with the interests of our stockholders. Following the delivery of shares of our common stock under those equity awards, once any applicable service time vesting standards have been satisfied, our executive officers from time to time may engage in the open-market sale of some of those shares. Our executive officers may also engage from time to time in other transactions involving our securities. Transactions in our securities by our executive officers are required to be made in accordance with our Securities Trading Policy, which, among other things, requires that the transactions be in accordance with applicable U.S. federal securities laws that prohibit trading while in possession of material nonpublic information. Rule 10b5-1 under the Exchange Act provides an affirmative defense that enables prearranged transactions in securities in a manner that avoids concerns about initiating transactions at a future date while possibly in possession of material nonpublic information. Our Securities Trading Policy permits our executive officers to enter into trading plans designed to comply with Rule 10b5-1. Accordingly, sales under these plans may occur at any time, including possibly before, simultaneously with, or immediately after significant events involving our Company. During the three months ended March 30, 2024, no director or officer of the Company has adopted or terminated a "Rule 10b5-1 trading arrangement" or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K. ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS Not applicable. PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE The information required to be disclosed by this item is incorporated herein by reference to our definitive proxy statement for the 2024 Annual Meeting of Stockholders (the "2024 Proxy Statement"), which proxy statement we expect to file with the SEC within 120 days after the end of our fiscal year ended March 30, 2024. ITEM 11. EXECUTIVE COMPENSATION The information required to be disclosed by this item is incorporated herein by reference to our 2024 Proxy Statement. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The information required to be disclosed by Item 403 of Regulation S-K is incorporated herein by reference to our 2024 Proxy Statement. 45 Table of Contents Equity Compensation Plan Information The following table sets forth information as of March 30, 2024, with respect to the Company's compensation plans and individual compensation arrangements under which the Company's equity securities were authorized for issuance to directors, officers, employees, consultants and certain other persons and entities in exchange for the provision of goods or services. Plan Category Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (a) Weighted- Average Exercise Price of Outstanding Options, Warrants and Rights (1) Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) Equity compensation plans approved by stockholders 157,103 $ 168.00 549,299 Equity compensation plans not approved by stockholders — — — Total 157,103 $ 168.00 549,299 (1) Includes 62,702 service and performance-based restricted stock units, for which there is no exercise price reflected in this column. 46 Table of Contents ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE The information required to be disclosed by this item is incorporated herein by reference to our 2024 Proxy Statement. ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES The information required to be disclosed by this item is incorporated herein by reference to our 2024 Proxy Statement. 47 Table of Contents PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES Financial Statements and Financial Statement Schedules Financial Statements are listed in the Index to Consolidated Financial Statements on page F-1 of this Annual Report. All schedules have been omitted because they are not applicable or the required information is included in the Consolidated Financial Statements or Notes thereto. Exhibits The documents listed below are being filed or have previously been filed on behalf of the Company and are incorporated herein by reference from the documents indicated and made a part hereof. Exhibits not identified as previously filed are filed herewith. Exhibit Number Exhibit Filed/Furnished Herewith or Incorporated by Reference 3.1 Restated Certificate of Incorporation of Cavco Exhibit 3.1 to the Annual Report on Form 10-K for the fiscal year ended March 31, 2004 3.2 Certificate of Amendment to Restated Certificate of Incorporation of Cavco Exhibit 3.1 to the Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2006 3.3 Certificate of Amendment to Restated Certificate of Incorporation of Cavco Exhibit 3.1 to the Quarterly Report on Form 10-Q for the fiscal quarter ended September 27, 2015 3.4 Fourth Amended and Restated Bylaws of Cavco Exhibit 3.1 to the Quarterly Report on Form 10-Q filed on February 2, 2024 4.1 Description of Registrant's Securities registered under Section 12 of the Securities Exchange Act of 1934, as amended. Exhibit 4.1 to the Annual Report on Form 10-K for the fiscal year ended March 28, 2020 10.1* Stock Incentive Plan of Cavco Exhibit 10.6 to the Registration Statement on Form 10/A (File No. 000-08822) filed by Cavco on May 30, 2003 10.1.1* Amendment to the Cavco Industries, Inc. Stock Incentive Plan Exhibit 10.1 to the Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2010 10.2* Cavco 2005 Stock Incentive Plan Exhibit A to the Corporation's Definitive Proxy Statement for its 2005 Annual Meeting of Stockholders filed by the Company with the Securities and Exchange Commission on May 23, 2005 10.2.1* First Amendment to Cavco Industries, Inc. 2005 Stock Incentive Plan Exhibit 10.2 to the Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2010 10.2.2* Second Amendment to Cavco Industries, Inc. 2005 Stock Incentive Plan Exhibit 10.1 to the Quarterly Report on Form 10-Q for the fiscal quarter ended September 26, 2015 10.2.3* Form of Restricted Stock Award Agreement for Stock Incentive Plan Exhibit 10.1 to the Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2012 10.2.4* Form of Stock Option Agreement for Stock Incentive Plan Exhibit 10.1 to the Quarterly Report on Form 10-Q for the fiscal quarter ended July 2, 2016 10.2.5* Form of Stock Option Agreement for Stock Incentive Plan Exhibit 10.1 to the Current Report on Form 8-K filed on January 8, 2019 10.2.6* Form of Cavco Industries, Inc. 2005 Stock Incentive Plan Restricted Stock Unit Agreement for Non-employee Directors Exhibit 10.2.10 to the Annual Report on Form 10-K for the fiscal year ended March 30, 2019 10.2.7* Form of Cavco Industries, Inc. 2005 Stock Incentive Plan Performance-based Restricted Stock Unit Award Agreement (2022) Exhibit 10.2.7 to the Annual Report on Form 10-K for the fiscal year ended April 2, 2022 10.2.8* Form of Cavco Industries, Inc. 2005 Stock Incentive Plan Restricted Stock Unit Agreement for Employees Exhibit 10.2.8 to the Annual Report on Form 10-K for the fiscal year ended April 1, 2023 10.2.9* Form of Cavco Industries, Inc. 2005 Stock Incentive Plan Performance-based Restricted Stock Unit Award Agreement (2023) Exhibit 10.2.9 to the Annual Report on Form 10-K for the fiscal year ended April 1, 2023 10.3* Cavco Industries, Inc. 2023 Omnibus Equity Incentive Plan Exhibit 10.1 to the Quarterly Report on Form 10-Q filed on November 3, 2023 10.3.1* Form of Cavco Industries, Inc. 2023 Omnibus Equity Incentive Plan Restricted Stock Unit Award Agreement Exhibit 10.1.1 to the Quarterly Report on Form 10-Q filed on November 3, 2023 48 Table of Contents Exhibit Number Exhibit Filed/Furnished Herewith or Incorporated by Reference 10.3.2* Form of Cavco Industries, Inc. 2023 Omnibus Equity Incentive Plan Restricted Stock Unit Award Agreement for Section 16 Employees and Above Exhibit 10.1.2 to the Quarterly Report on Form 10-Q filed on November 3, 2023 10.3.3* Form of Cavco Industries, Inc. 2023 Omnibus Equity Incentive Plan Restricted Stock Unit Agreement for Non-Employee Directors Exhibit 10.1.3 to the Quarterly Report on Form 10-Q filed on November 3, 2023 10.3.4* Form of Cavco Industries, Inc. 2023 Omnibus Equity Incentive Plan Performance-based Restricted Stock Unit Award Agreement Exhibit 10.1.4 to the Quarterly Report on Form 10-Q filed on November 3, 2023 10.3.5* Form of Cavco Industries, Inc. 2023 Omnibus Equity Incentive Plan Performance-based Restricted Stock Unit Award Agreement for Section 16 Employees and Above Exhibit 10.1.5 to the Quarterly Report on Form 10-Q filed on November 3, 2023 10.3.8* Form of Officer Indemnification Agreement Exhibit 10.1 to the Quarterly Report on Form 10-Q filed on February 2, 2024 10. 4 * Employment Agreement, dated as of April 1, 2019, by and between William C. Boor and Cavco Industries, Inc. Exhibit 10.1 to the Current Report on Form 8-K filed on April 2, 2019 10. 4 . 1 * Employment Agreement, dated as of April 1, 2019, by and between Mickey R. Dragash and Cavco Industries, Inc. Exhibit 10.6 to the Current Report on Form 8-K filed on April 2, 2019 10.4.2* Release of Claims Agreement, dated March 5 , 2024, by and between Mickey R. Dragash and Cavco Industries, Inc. Filed herewith 10. 4 . 3 * Offer Letter, dated as of January 7, 2020, between the Company and Matthew Niño Exhibit 10.3.6 to the Annual Report on Form 10-K for the fiscal year ended March 28, 2020 10. 4 . 4 * Compensatory Arrangements of Allison K. Aden, dated as of August 5, 2021 Current Report on Form 8-K filed on August 10, 2021 10. 4 . 5 * Severance Agreement, dated as of November 2, 2021, by and between Allison K. Aden and Cavco Industries, Inc. Exhibit 10.1 to the Quarterly Report on Form 10-Q for the fiscal quarter ended October 2, 2021 10.4.6* Severance Agreement, dated May 20, 2020, by and between Steven K. Like and Cavco Industries, Inc. Exhibit 10.3.8 to the Annual Report on Form 10-K for the fiscal year ended March 28, 2020 10.4.7* Offer Letter, dated as of January 30, 2024, between the Company and Seth Schuknecht Filed herewith 10.4.9* Severance Agreement, dated February 13, 2024, by and between Seth Schuknecht and Cavco Industries, Inc. Filed herewith 10.5* Executive Officer Incentive Plans for Fiscal Year 2022 Current Report on Form 8-K filed on July 2, 2021 10. 6 * Form of Indemnification Agreement Exhibit 10.5 to Current Report on Form 8-K filed on April 2, 2019 10. 7 * Form of Change in Control Agreement Exhibit 10.2 to the Quarterly Report on Form 10-Q for the fiscal quarter ended October 2, 2021 10.8 Asset Purchase Agreement, dated July 23, 2021, by and among Commodore Homes, LLC, The Commodore Corporation, TCC Clarion Limited Partnership, TCC Pennwest, LLC and each of the individual equityholders named therein, and Barry S. Shein, in his capacity as Sellers' representative Exhibit 10.3 to the Current Report on Form 8-K filed on July 26, 2021 10.9 Credit Agreement, dated as of November 22, 2022, among Cavco Industries, Inc., the guarantors party thereto, and Bank of America, N.A., as administrative agent, swing line lender and letter of credit issuer. Exhibit 10.1 to the Current Report on Form 8-K filed on November 23, 2022 14 Code of Conduct Filed herewith 19 Securities Trading Policy, dated October 30, 2023 Filed herewith 21 List of Subsidiaries of Cavco Filed herewith 23 Consent of RSM US LLP, Independent Registered Public Accounting Firm Filed herewith 31.1 Certificate of William C. Boor, President and Chief Executive Officer, pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended Filed herewith 31.2 Certificate of Allison K. Aden, Chief Financial Officer, pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended Filed herewith 49 Table of Contents Exhibit Number Exhibit Filed/Furnished Herewith or Incorporated by Reference 32.1** Certifications of Chief Executive Officer and Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Furnished herewith 97 Cavco Industries, Inc., Clawback Policy Filed herewith 101.INS Inline XBRL Instance Document- the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. 101.SCH Inline XBRL Taxonomy Extension Schema 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase 101.LAB Inline XBRL Taxonomy Extension Label Linkbase 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase 104 Cover Page Interactive Data File- the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document * Management contract or compensatory plan or arrangement ** These certifications are not "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. These certifications are not to be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, unless Cavco specifically incorporates them by reference. ITEM 16. FORM 10-K SUMMARY None. 50 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. CAVCO INDUSTRIES, INC. Date: May 24, 2024 /s/ William C. Boor William C. Boor President and Chief Executive Officer (Principal Executive Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Signature Title Date /s/ William C. Boor Director, President and Chief Executive Officer May 24, 2024 William C. Boor (Principal Executive Officer) /s/ Allison K. Aden Executive Vice President, Chief Financial Officer & Treasurer May 24, 2024 Allison K. Aden (Principal Financial Officer) /s/ Paul W. Bigbee Chief Accounting Officer May 24, 2024 Paul W. Bigbee (Principal Accounting Officer) /s/ Steven G. Bunger Chairman of the Board of Directors May 24, 2024 Steven G. Bunger /s/ Susan L. Blount Director May 24, 2024 Susan L. Blount /s/ David A. Greenblatt Director May 24, 2024 David A. Greenblatt /s/ Richard A. Kerley Director May 24, 2024 Richard A. Kerley /s/ Steven W. Moster Director May 24, 2024 Steven W. Moster /s/ Julia W. Sze Director May 24, 2024 Julia W. Sze 51 Table of Contents CAVCO INDUSTRIES, INC. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Report of Independent Registered Public Accounting Firm (PCAOB ID: 49 ) F- 2 Consolidated Balance Sheets as of March 30, 2024 and April 1, 2023 F- 4 Consolidated Statements of Comprehensive Income for the Years Ended March 30, 2024, April 1, 2023 and April 2, 2022 F- 5 Consolidated Statements of Stockholders' Equity And Redeemable Noncontrolling Interest for the Years Ended March 30, 2024, April 1, 2023 and April 2, 2022 F- 6 Consolidated Statements of Cash Flows for the Years Ended March 30, 2024, April 1, 2023 and April 2, 2022 F- 7 Notes to Consolidated Financial Statements F- 8 F-1 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and the Board of Directors of Cavco Industries, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Cavco Industries, Inc. (the Company) as of March 30, 2024 and April 1, 2023, the related consolidated statements of comprehensive income, stockholders' equity and redeemable noncontrolling interest and cash flows for each of the three years in the period ended March 30, 2024, and the related notes to the consolidated financial statements (collectively, the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of March 30, 2024 and April 1, 2023, and the results of its operations and its cash flows for each of the three years in the period ended March 30, 2024, in conformity with accounting principles generally accepted in the United States of America. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of March 30, 2024, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013, and our report dated May 24, 2024 expressed an unqualified opinion on the effectiveness of the Company's internal control over financial reporting. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or is required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates. F-2 Table of Contents Warranty Reserve As described in Note 1 to the consolidated financial statements, the Company provides retail home buyers, builders or developers with a one year warranty for manufacturing defects from the date of sale to the retail customer. Nonstructural components of a cosmetic nature are warranted for 120 days, except in specific cases where state laws require longer warranty terms . The Company's warranty reserves were $31.7 million as of March 30, 2024 and estimated warranty costs are accrued in cost of sales at the time of sale. Management determines the warranty reserves based on estimates of the amounts necessary to settle existing and future claims on homes sold as of the balance sheet date. Factors used by management to calculate the warranty obligation are the estimated number of homes under warranty, including homes in distributor inventories, homes purchased by consumers within the one year warranty period, the timing in which work orders are completed and the historical average costs incurred to service a home. We identified the warranty reserve as a critical audit matter because of the significant judgments made by management to estimate costs related to warranty reserves at the time of sale. This required a high degree of auditor judgment and an increased extent of effort when performing audit procedures to evaluate the reasonableness of management’s estimates of future warranty claims based on historical claims paid, specifically due to significant growth since inception, introduction of new product lines, acquisitions, and variability in repair costs. Our audit procedures related to the Company’s significant estimates and assumptions of the warranty reserve included the following, among others: • We obtained an understanding of the relevant controls related to the management’s estimation of the warranty accrual, including controls over the historical warranty claim data and projected • We tested management’s process for determining the warranty reserve by evaluating the reasonableness of significant assumptions related to the estimation of future claims and the related costs to repair items under warranty. • We evaluated the accuracy, completeness and relevance of the historical warranty claims as an input to management’s warranty accrual calculation. • We evaluated management’s ability to accurately estimate the warranty accrual by comparing the warranty accrual from the prior year to the actual warranty claims paid in the subsequent year. /s/ RSM US LLP We have served as the Company's auditor since 2015. Phoenix, Arizona May 24, 2024 F-3 Table of Contents CAVCO INDUSTRIES, INC. CONSOLIDATED BALANCE SHEETS (Dollars in thousands, except per share amounts) March 30, 2024 April 1, 2023 ASSETS Current assets: Cash and cash equivalents $ 352,687 $ 271,427 Restricted cash, current 15,481 11,728 Accounts receivable, net 77,123 89,347 Short-term investments 18,270 14,978 Current portion of consumer loans receivable, net 20,713 17,019 Current portion of commercial loans receivable, net 40,787 43,414 Current portion of commercial loans receivable from affiliates, net 2,529 640 Inventories 241,339 263,150 Prepaid expenses and other current assets 82,870 92,876 Total current assets 851,799 804,579 Restricted cash 585 335 Investments 17,316 18,639 Consumer loans receivable, net 23,354 27,129 Commercial loans receivable, net 45,660 53,890 Commercial loans receivable from affiliate, net 2,065 4,033 Property, plant and equipment, net 224,199 228,278 Goodwill 121,934 114,547 Other intangibles, net 28,221 29,790 Operating lease right-of-use assets 39,027 26,755 Total assets $ 1,354,160 $ 1,307,975 LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 33,531 $ 30,730 Accrued expenses and other current liabilities 239,736 262,661 Total current liabilities 273,267 293,391 Operating lease liabilities 35,148 21,678 Other liabilities 7,759 7,820 Deferred income taxes 4,575 7,581 Redeemable noncontrolling interest — 1,219 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 9,389,953 and 9,337,125 shares, respectively; Outstanding 8,320,718 and 8,665,324 shares, respectively 94 93 Treasury stock, at cost; 1,069,235 and 671,801 shares, respectively ( 274,693 ) ( 164,452 ) Additional paid-in capital 281,216 271,950 Retained earnings 1,027,127 869,310 Accumulated other comprehensive loss ( 333 ) ( 615 ) Total stockholders' equity 1,033,411 976,286 Total liabilities, redeemable noncontrolling interest and stockholders' equity $ 1,354,160 $ 1,307,975 See accompanying Notes to Consolidated Financial Statements F-4 Table of Contents CAVCO INDUSTRIES, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Dollars in thousands, except per share amounts) Year Ended March 30, 2024 April 1, 2023 April 2, 2022 Net revenue $ 1,794,792 $ 2,142,713 $ 1,627,158 Cost of sales 1,367,890 1,587,781 1,218,409 Gross profit 426,902 554,932 408,749 Selling, general and administrative expenses 247,920 258,323 206,253 Income from operations 178,982 296,609 202,496 Interest income 20,998 10,679 3,537 Interest expense ( 1,649 ) ( 910 ) ( 702 ) Other income, net 849 385 6,658 Income before income taxes 199,180 306,763 211,989 Income tax expense ( 41,275 ) ( 65,922 ) ( 14,247 ) Net income 157,905 240,841 197,742 Less: net income attributable to redeemable noncontrolling interest 88 287 43 Net income attributable to Cavco common stockholders $ 157,817 $ 240,554 $ 197,699 Comprehensive income Net income $ 157,905 $ 240,841 $ 197,742 Reclassification adjustment for securities sold 95 ( 16 ) ( 17 ) Applicable income taxes ( 20 ) 3 4 Net change in unrealized position of investments held 262 ( 252 ) ( 616 ) Applicable income taxes ( 55 ) 53 129 Comprehensive income 158,187 240,629 197,242 Less: comprehensive income attributable to redeemable noncontrolling interest 88 287 43 Comprehensive income attributable to Cavco common stockholders $ 158,099 $ 240,342 $ 197,199 Net income per share attributable to Cavco common stockholders Basic $ 18.55 $ 27.20 $ 21.54 Diluted $ 18.37 $ 26.95 $ 21.34 Weighted average shares outstanding: Basic 8,506,673 8,844,326 9,178,593 Diluted 8,591,911 8,924,452 9,264,153 See accompanying Notes to Consolidated Financial Statements F-5 Table of Contents CAVCO INDUSTRIES, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND REDEEMABLE NONCONTROLLING INTEREST (Dollars in thousands) Stockholders' Equity 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 $ — Initial value of noncontrolling interest upon transaction — — — — — — — 1,235 Net income — — — — 197,699 — 197,699 43 Other comprehensive loss, net — — — — — ( 500 ) ( 500 ) — Net issuance of common stock under stock incentive plans 51,022 1 — 4,155 — — 4,156 — Stock-based compensation — — — 5,059 — — 5,059 — Common stock repurchases — — ( 59,599 ) — — — ( 59,599 ) — Distributions — — — — — — — ( 375 ) Valuation adjustment — — — — — — — ( 78 ) Balance, April 2, 2022 9,292,278 $ 93 $ ( 61,040 ) $ 263,049 $ 628,756 $ ( 403 ) $ 830,455 $ 825 Net income — — — — 240,554 — 240,554 287 Other comprehensive loss, net — — — — — ( 212 ) ( 212 ) — Net issuance of common stock under stock incentive plans 44,847 — — 2,637 — — 2,637 — Stock-based compensation — — — 6,264 — — 6,264 — Common stock repurchases — — ( 103,412 ) — — — ( 103,412 ) — Distributions — — — — — — — ( 780 ) Valuation adjustment — — — — — — — 887 Balance, April 1, 2023 9,337,125 $ 93 $ ( 164,452 ) $ 271,950 $ 869,310 $ ( 615 ) $ 976,286 $ 1,219 Net income — — — — 157,817 — 157,817 88 Other comprehensive income, net — — — — — 282 282 — Net issuance of common stock under stock incentive plans 52,828 1 — 2,506 — — 2,507 — Stock-based compensation — — — 6,760 — — 6,760 — Common stock repurchases — — ( 110,241 ) — — — ( 110,241 ) — Distributions — — — — — — — ( 300 ) Valuation adjustment — — — — — — — ( 33 ) Conversion to mandatorily redeemable noncontrolling interest — — — — — — — ( 974 ) Balance, March 30, 2024 9,389,953 $ 94 $ ( 274,693 ) $ 281,216 $ 1,027,127 $ ( 333 ) $ 1,033,411 $ — See accompanying Notes to Consolidated Financial Statements F-6 Table of Contents CAVCO INDUSTRIES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) Year Ended March 30, 2024 April 1, 2023 April 2, 2022 OPERATING ACTIVITIES Net income $ 157,905 $ 240,841 $ 197,742 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 18,525 16,903 11,017 Provision for loan losses ( 632 ) ( 517 ) ( 325 ) Deferred income taxes ( 3,081 ) 2,110 ( 1,732 ) Stock-based compensation expense 6,760 6,264 5,059 Non-cash interest income, net ( 1,511 ) ( 457 ) ( 1,629 ) Loss (gain) on sale or retirement of property, plant and equipment, net 132 ( 281 ) ( 220 ) Gain on investments and sale of loans, net ( 9,041 ) ( 12,300 ) ( 18,364 ) Distribution of earnings from equity method investments — 4,306 — Changes in operating assets and liabilities, net of acquisitions Accounts receivable 11,566 10,238 ( 27,268 ) Consumer loans receivable originated ( 90,841 ) ( 177,970 ) ( 158,988 ) Proceeds from sales of consumer loans 91,514 186,017 184,849 Principal payments received on consumer loans receivable 6,760 8,967 11,553 Inventories 44,856 38,866 ( 73,804 ) Prepaid expenses and other current assets 7,971 ( 20,037 ) ( 28,309 ) Commercial loans receivable originated ( 111,245 ) ( 132,050 ) ( 67,896 ) Principal payments received on commercial loans receivable 117,302 98,196 74,311 Accounts payable and accrued expenses and other current liabilities ( 22,258 ) ( 13,403 ) 38,228 Net cash provided by operating activities 224,682 255,693 144,224 INVESTING ACTIVITIES Purchases of property, plant and equipment ( 17,421 ) ( 44,106 ) ( 18,653 ) Payments for acquisitions, net ( 19,195 ) ( 105,662 ) ( 141,429 ) Proceeds from sale of property, plant and equipment and assets held for sale 4,805 1,816 1,329 Purchases of investments ( 13,026 ) ( 12,533 ) ( 12,799 ) Proceeds from sale of investments 13,128 18,931 12,450 Return of invested capital from equity method investments — 12,213 — Net cash used in investing activities ( 31,709 ) ( 129,341 ) ( 159,102 ) FINANCING ACTIVITIES Payments for taxes on stock option exercises and releases of equity awards ( 1,988 ) ( 1,072 ) ( 266 ) Proceeds from exercise of stock options 4,495 3,709 4,422 Proceeds from secured financings and other — — 106 Payments on secured financings and other ( 488 ) ( 641 ) ( 9,383 ) Payments for common stock repurchases ( 109,309 ) ( 103,412 ) ( 59,599 ) Distributions to noncontrolling interest ( 420 ) ( 780 ) ( 375 ) Net cash used in financing activities ( 107,710 ) ( 102,196 ) ( 65,095 ) Net increase (decrease) in cash, cash equivalents and restricted cash 85,263 24,156 ( 79,973 ) Cash, cash equivalents and restricted cash at beginning of the fiscal year 283,490 259,334 339,307 Cash, cash equivalents and restricted cash at end of the fiscal year $ 368,753 $ 283,490 $ 259,334 Supplemental disclosures of cash flow information: Cash paid during the year for income taxes $ 36,757 $ 82,438 $ 31,415 Cash paid during the year for interest $ 801 $ 619 $ 451 Supplemental disclosures of noncash activity: Change in GNMA loans eligible for repurchase $ ( 3,287 ) $ ( 2,494 ) $ ( 16,238 ) Right-of-use assets recognized and operating lease obligations incurred $ 15,009 $ 14,455 $ 4,414 Fair value of assets acquired under finance lease $ — $ — $ 7,158 Finance lease obligations incurred $ — $ — $ 6,351 Non-cash consideration for acquisitions $ 5,430 $ — $ — See accompanying Notes to Consolidated Financial Statements F-7 Table of Contents CAVCO INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Summary of Significant Accounting Policies Principles of Consolidation. These Consolidated Financial Statements include the accounts of Cavco Industries, Inc. and its consolidated subsidiaries (collectively, "we," "us," "our," the "Company" or "Cavco"). All significant intercompany transactions and balances have been eliminated in consolidation. Certain prior period amounts have been reclassified to conform to current period classification. We have evaluated subsequent events after the balance sheet date of March 30, 2024, through the date of the filing of this report with the Securities and Exchange Commission (the "SEC") and there were no disclosable subsequent events . In addition, references throughout to numbered "Notes" refer to these Notes to Consolidated Financial Statements, unless otherwise stated. Nature of Operations. Headquartered in Phoenix, Arizona, we design and produce factory-built housing products primarily distributed through a network of independent distributors located throughout the continental United States and Canada, as well as through Company-owned retail stores which offer our homes to retail customers. Our financial services segment is comprised of: a mortgage subsidiary, CountryPlace Acceptance Corp. ("CountryPlace"), which is an approved Federal National Mortgage Association ("Fannie Mae") and Federal Home Loan Mortgage Corporation ("Freddie Mac") seller/servicer and a Government National Mortgage Association ("Ginnie Mae" or "GNMA") mortgage-backed securities issuer that offers conforming mortgages, non-conforming mortgages and home-only loans to purchasers of factory-built homes; and an insurance subsidiary, Standard Casualty Co. ("Standard Casualty"), which provides property and casualty insurance primarily to owners of manufactured homes. Fiscal 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 . Th e current fiscal year ended on March 30, 2024. Fiscal years 2024, 2023 and 2022 each consisted of 52 weeks. Accounting Estimates. Preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Due to uncertainties, a ctual results could differ from the estimates and assumptions used in preparation of the consolidated financial statements. Factory-Built Housing Revenue Recognition - Wholesale . Revenue from homes sold to independent distributors, builders, communities and developers is generally recognized when the home is shipped, at which time title passes and it is probable that substantially all of the consideration will be received. Homes sold to independent distributors are generally either paid upon shipment or floor plan financed by the independent distributor through standard industry financing arrangements, which can include repurchase agreements. Manufacturing sales financed under floor plan arrangements that include repurchase agreements are reduced by a reserve for repurchase commitments (see Note 17). Some of our independent distributors operate multiple sales outlets. No independent distributor accounted for 10% or more of factory-built housing revenue during any fiscal year within the three-year period ended March 30, 2024. Factory-Built Housing Revenue Recognition - Retail . Sales by Company-owned retail stores are generally recognized when the customer has entered into a legally binding sales contract, the home is delivered and permanently located at the customer's site, the home is accepted by the customer, title has transferred and collectibility is probable. Financial Services Revenue Recognition. Premium amounts collected on policies issued and assumed by Standard Casualty are amortized on a straight-line basis into Net revenue over the life of the policy. Premiums earned are net of reinsurance ceded. Policy acquisition costs are also amortized in Cost of sales over the life of the policy. Insurance agency commissions received from third-party insurance companies are recognized as revenue upon execution of the insurance policy as we have no future or ongoing obligation with respect to such policies. F-8 Table of Contents Interest income on consumer loans receivables is recognized in Net revenue. Upon acquisition of previously securitized loan portfolios (the "Acquisition Date"), we evaluated the existing consumer loans receivable held for investment to determine whether there was evidence of deterioration of credit quality and the probability that we would be able to collect all amounts due according to the loans' contractual terms. We also considered expected prepayments and estimated the amount and timing of undiscounted principal, interest and other cash flows. We determined the excess of the loan pool's scheduled contractual principal and interest payments over the undiscounted expected cash flows as of the Acquisition Date as an amount that is not accreted into interest income (the non-accretable difference). The cash flow expected to be collected in excess of the carrying value of the acquired loans was accreted into Interest income over the remaining life of the loans (referred to as accretable yield). For loans originated and held for sale, loan origination fees and gains or losses on sales are recognized in Net revenue upon title transfer of the loans. We provide third-party servicing of mortgages and earn servicing fees each month based on the aggregate outstanding balances. Servicing fees are recognized in Net revenue when earned. Cash and Cash Equivalents . Highly liquid investments with insignificant interest rate risk and original maturities of three months or less, when purchased, are classified as cash equivalents. Our cash equivalents are primarily comprised of U.S. Treasury and other money market funds and other depository accounts, some of which are in excess of Federal Deposit Insurance Corporation insured limits. We have not experienced any losses on such excesses. Restricted Cash . Restricted cash primarily represents cash related to CountryPlace customer payments to be remitted to third parties and deposits received from retail customers required to be held in trust accounts. These funds cannot be accessed for general operating purposes (see Note 3). Accounts Receivable. We extend credit terms on a customer-by-customer basis in the normal course of business, subject to normal industry risk, with many requiring a cash deposit with a sales order or payment upon delivery of a home. We review accounts receivable for estimated losses that may result from customers' inability to pay. As of March 30, 2024 and April 1, 2023, there were no allowances for doubtful accounts. Investments. Management determines the appropriate classification of its investment securities at the time of purchase. Our investments include marketable debt and equity securities and non-marketable equity investments. Changes in unrealized net holding gains and losses on marketable equity securities are reported in earnings. Unrealized net holding gains and losses on available-for-sale debt securities are recorded in Accumulated other comprehensive income (loss) ("AOCI") in the Consolidated Balance Sheets. Realized gains and losses from the sale of securities are determined using the specific identification method (see Note 4). As of March 30, 2024, we have determined that all losses on available-for-sale debt securities were from market factors, and therefore we had no valuation allowance on such investments. Consumer Loans Receivable. Consumer loans receivable consist primarily of manufactured housing loans originated by CountryPlace (held for investment or held for sale) and construction advances on mortgages. Loans held for investment consist of loan contracts collateralized by the borrowers' homes and, in some instances, related land. Construction loans in progress are stated at the aggregate amount of cumulative funded advances. Loans held for sale are loans that, at the time of origination, are originated with the intent to resell to investors with which the Company has pre-existing purchase agreements, such as Fannie Mae and Freddie Mac, or to sell as part of a Ginnie Mae insured pool of loans and consist of loan contracts collateralized by single-family residential mortgages. Loans held for sale are stated at the lower of amortized cost or fair value on an aggregate basis. Combined land and home mortgages are further disaggregated by the type of loan documentation: those conforming to the requirements of Government-Sponsored Enterprises ("GSEs") and those that are non-conforming. In most instances, our mortgages are secured by a first-lien position and are provided to consumers for the purchase of a home. Consumer loans held for investment include home-only personal property loans originated under our home-only lending programs. Accordingly, we classify our loans receivable as follows: conforming mortgages, non-conforming mortgages and home-only loans. F-9 Table of Contents In measuring credit quality within each segment and class, we use commercially available credit scores (such as FICO®). At the time of each loan's origination, we obtain credit scores from each of the three primary credit bureaus, if available. To evaluate credit quality of individual loans, we use the mid-point of the available credit scores or, if only two scores are available, we use the lower of the two. We do not update credit bureau scores after the time of origination. Commercial Loans Receivable. Our commercial loans receivable balance consists of amounts loaned under commercial loan programs for the benefit of our independent distributors and community operators' home purchasing needs. Under the terms of certain programs, we have entered into direct commercial loan arrangements with independent distributors and community operators wherein we provide funds to purchase home inventory or homes for placement in communities. Interest income on commercial loans receivable is recognized in Interest income in the Consolidated Statements of Comprehensive Income on an accrual basis. Allowance for Loan Losses. Financial Accounting Standards Board ("FASB") Accounting Standards Update ("ASU") 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("ASU 2016-13") requires a forward-looking impairment model based on expected losses rather than incurred losses. As of March 30, 2024 and April 1, 2023, we had an allowance for loan losses of $ 1.1 million and $ 1.2 million, respectively, on our consumer loans receivable (see Note 6). To determine the appropriate level of the allowance for loan loss on our commercial loans receivable, we collectively evaluate loans based on their terms and duration. We have historically been able to resell repossessed homes, thereby mitigating loss exposure. However, if a default occurs and collateral is lost, we are exposed to loss of the full value of the home loan. If we determine that it is probable that a borrower will default, a specific reserve is determined and recorded within the estimated allowance for loan losses. We recorded allowance for loan losses of $ 0.8 million and $ 1.6 million at March 30, 2024 and April 1, 2023, respectively, related to commercial loans receivable (see Note 7). Inventories. Raw material inventories are valued at the lower of cost or net realizable value, using the first in, first out method. Finished goods and work-in-process inventories are valued at the lower of cost or net realizable value, using the specific identification method. Property, Plant and Equipment, Net. Property, plant and equipment are carried at cost. Depreciation is calculated using the straight-line method over the estimated useful life of each asset. Estimated useful lives for significant classes of assets are as follows: buildings and improvements, 10 to 39 years; and machinery and equipment, 3 to 25 years. Repairs and maintenance charges are expensed as incurred. We sell miscellaneous property, plant and equipment in the normal course of business. Asset Impairment . We periodically evaluate the carrying value of long-lived assets to be held and used and held for sale for impairment when events and circumstances warrant such a review. The carrying value of a long-lived asset is considered impaired when the anticipated undiscounted cash flow from such asset is less than its carrying value. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair value of the long-lived asset group. Fair value is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved. Losses on long-lived assets to be disposed of are primarily determined based on independent appraisals and preliminary or definitive contractual arrangements less costs to dispose. There were no impairment losses recognized in fiscal years 2024, 2023 or 2022 . Business Combinations. We account for business combinations in accordance with FASB Accounting Standards Codification ("ASC") 805, Business Combinations, using the acquisition method of accounting, which allocates the fair value of the purchase consideration to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values. In the fair value evaluation of intangible assets acquired, there are significant estimates and assumptions, including forecasts of future cash flows, pre-tax income and revenue growth rates, as well as the selection of the royalty rates and discount rates. The excess of the purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. F-10 Table of Contents Goodwill and Other Intangibles, Net. We account for goodwill and other intangible assets in accordance with the provisions of ASC 350, Intangibles—Goodwill and Other . As such, we test goodwill at least annually for impairment. The Company has two reporting segments: factory-built housing and financial services. As of March 30, 2024, all of our goodwill is attributable to the factory-built housing reporting segment. Certain intangibles are considered indefinite-lived and others are finite-lived and are amortized over their useful lives. Finite-lived intangibles are generally amortized over 3 to 15 years on a straight-line basis and are reviewed for possible impairment whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable. Indefinite-lived intangible assets are assessed annually for impairment first by making a qualitative assessment, and if necessary, performing a quantitative assessment and recording an impairment charge if the fair value of the asset is less than its carrying amount. We performed our annual goodwill impairment analysis as of March 30, 2024, and determined that it was more likely than not that the fair value of the factory-built housing reporting segment exceeded its respective carrying value. There was no impairment recognized during fiscal years 2024, 2023 or 2022. Warranties. We provide retail home buyers, builders or developers with a one year warranty for manufacturing defects from the date of sale to the retail customer. Nonstructural components of a cosmetic nature are warranted for 120 days, except in specific cases where state laws require longer warranty terms. Estimated warranty costs are accrued in Cost of sales at the time of sale. The warranty provision and reserves are based on estimates of the amounts necessary to settle existing and future claims on homes sold as of the balance sheet date. Factors used to calculate the warranty obligation are the estimated amount of homes still under warranty, including homes in distributor inventories, homes purchased by consumers within the one year warranty period, the timing in which work orders are completed and the historical average costs incurred to service a home. Volume Rebates . Certain distributors, builders and developers can qualify for cash rebates generally based on the level of sales attained during a twelve-month period on specified products. Estimates of volume rebates are accrued at the time of sale and are recorded as a reduction of Net revenue. Freight. Substantially all freight costs are recovered from our distributors and are included in Net revenue. Freight charges of $ 50.9 million, $ 61.5 million and $ 41.5 million were recognized in fiscal years 2024, 2023 and 2022, respectively. Reserve for Repurchase Commitment. We are contingently liable under terms of repurchase agreements with the financial institutions that provide inventory financing to certain distributors of our products. These arrangements, which are customary in the industry, provide the lender a guarantee that we will repurchase our products in the event of default by the distributor. Our obligation under these repurchase agreements ceases upon the purchase of the home by the retail customer. The risk of loss under these agreements is spread over numerous distributors and the repurchase price generally declines over the period of the agreement (generally 18 to 24 months), further reduced by the resale value of repurchased homes. We apply FASB ASC 460, Guarantees ("ASC 460") to account for our liability for repurchase commitments. Following the inception of the commitment, the recorded reserve is reduced over the repurchase period in conjunction with applicable curtailment arrangements and is eliminated once the distributor sells the home. Changes in the reserve are recorded as an adjustment to Net revenue. See Note 17 for further discussion. Reserve for Property Casualty Insurance Claims and Claims Expense. Standard Casualty establishes reserves for claims and claims expense on reported and unreported claims of insured losses. Our reserve process takes into account known facts and interpretations of circumstances and factors, including experience with similar cases, actual claims paid, historical trends involving claim payment patterns and pending levels of unpaid claims, loss management programs, product mix, contractual terms, changes in law and regulation, judicial decisions and economic conditions. In the normal course of business, we may also supplement our claims processes by utilizing third party adjusters, appraisers, engineers, inspectors and other professionals and information sources to assess and settle catastrophe and non-catastrophe related claims. The effects of inflation are implicitly considered in the reserving process. The applicable reserve balance was $ 10.5 million and $ 10.9 million as of March 30, 2024 and April 1, 2023, respectively, of which $ 5.2 million and $ 4.4 million related to incurred but not reported ("IBNR") losses, respectively. F-11 Table of Contents Insurance. We are self-insured for a significant portion of our general and products liability, auto liability, health, property and workers' compensation liability coverage. Insurance is maintained for catastrophic exposures and those risks required to be insured by law. Estimated self-insurance costs are accrued for incurred claims and estimated IBNR losses. A reserve for products liability is actuarially determined and reflected in Accrued expenses and other current liabilities in the accompanying Consolidated Balance Sheets. The determination of claims and expenses and the appropriateness of the related liabilities are regularly reviewed and updated. Advertising. Advertising costs are expensed as incurred and were $ 3.6 million in fiscal year 2024, $ 2.0 million in fiscal year 2023 and $ 1.4 million in fiscal year 2022. Fair Value of Financial Instruments. Our financial instruments consist of cash and cash equivalents, restricted cash, accounts receivable, investments, consumer loans receivable, commercial loans receivable, accounts payable, certain accrued expenses and other current liabilities and secured credit facilities and other financings. In accordance with FASB ASC 820, Fair Value Measurements and Disclosures ("ASC 820"), fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value: Level 1 – Quoted prices in active markets for identical assets or liabilities. Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The carrying amount of cash and cash equivalents approximates fair value because their maturity is less than three months. The carrying amounts of restricted cash, accounts receivable, accounts payable and certain accrued expenses and other current liabilities approximate fair value due to the short-term maturity of the amounts. See Note 20 for the fair values of our other financial instruments and the inputs used. Foreign Currency. We have certain assets and liabilities in Ojinaga, Mexico related to a production facility that imports raw materials and exports finished homes to our retail lots located in the United States. The monetary assets and liabilities of this production facility are remeasured at each balance sheet date at the current exchange rate. Monetary assets and liabilities and related revenues and expenses are remeasured monthly using the average rates for the fiscal month. Remeasurement adjustments are recorded in Other income, net in the Consolidated Statements of Comprehensive Income. Income Taxes. We account for income taxes pursuant to FASB ASC 740, Income Taxes ("ASC 740") and provide for income taxes utilizing the asset and liability approach. Under this approach, deferred taxes represent the future tax consequences expected to occur when the reported amounts of assets and liabilities are recovered or paid. The provision for income taxes generally represents income taxes paid or payable for the current year plus the change in deferred taxes during the year. Deferred taxes result from differences between the financial and tax bases of the Company's assets and liabilities and are adjusted for changes in tax rates and tax laws when changes are enacted. The calculation of tax liabilities involves considering uncertainties in the application of complex tax regulations. We recognize liabilities for anticipated tax audit issues based on our estimate of whether, and the extent to which, additional taxes will be due. If payment of these amounts ultimately proves to be unnecessary, the reversal of the liabilities would result in tax benefits being recognized in the period of derecognition. If the estimate of tax liabilities proves to be less than the ultimate assessment, a further charge to expense would result. We use a two-step approach to evaluate uncertain tax positions. This approach involves recognizing any tax positions that are more likely than not to occur and then measuring those positions to determine the amounts to be recognized in the Consolidated Financial Statements. F-12 Table of Contents Interest Income. Interest income consists of the interest earned on invested cash as well as interest earned from our commercial loan programs, recorded on an accrual basis. Other Income, net. Other income primarily consists of realized and unrealized gains and losses on corporate investments, gains and losses on the sale of property, plant and equipment or assets held for sale and impairment of such assets, if necessary. Stock-Based Compensation . Stock-based compensation is measured based on the fair value of the award on the date of grant and the corresponding expense is recognized over the period during which an employee is required to provide service in exchange for the award. Stock-based compensation expense is classified in the same line item of our Consolidated Statements of Comprehensive Income as other payroll-related expenses specific to the employee. Compensation expense related to service-based restricted stock units ("RSUs") is recognized on a straight-line basis over the requisite service period for the entire award. Compensation expense related to performance-based RSUs is recognized on a straight-line basis over the requisite service period for each separately vesting portion of the award as if the award was, in-substance, multiple awards (i.e., a graded vesting basis). We use historical data to estimate pre-vesting forfeitures and record stock-based compensation cost, using the straight-line attribution method, only for those awards that are expected to vest. Compensation expense related to performance-based awards is based on management's estimate of the probability of the performance criteria being satisfied, adjusted at each balance sheet date (see Note 18). Redeemable Noncontrolling Interest. In fiscal year 2017, we purchased a 50 % ownership interest in Craftsman Homes, LLC and Craftsman Homes Development, LLC (collectively "Craftsman" or the "Entities") with an additional 20 % acquired during fiscal year 2022. This additional purchase gave us a controlling interest, resulting in consolidation of the Entities and the recognition of a noncontrolling interest for the remaining third party ownership. Adjustments in the redemption value of the noncontrolling interest were recorded to Interest expense We were contractually obligated to purchase an additional 20 % of Craftsman on December 31, 2023. The estimated purchase price was recorded in Other liabilities. The remaining 10 % was classified as a temporary equity mezzanine item between liabilities and stockholders' equity in the Consolidated Balance Sheets as Redeemable noncontrolling interest. The amount of income attributable to this Redeemable noncontrolling interest is included on the face of the Consolidated Statements of Comprehensive Income. During fiscal year 2024, we executed amendments to the Membership Interest Purchase Agreement to acquire the entire remaining 30 % for cash on January 1, 2024. Upon execution of the amendments, the remaining 30 % became mandatorily redeemable, and the value attributed to the Redeemable noncontrolling interest was reclassed to Accrued expenses and other current liabilities on the Consolidated Balance Sheets at the estimated redemption value. On January 1, 2024 we acquired the remaining 30 % interest. Accumulated Other Comprehensive Income (Loss). AOCI is comprised of unrealized gains and losses on available-for-sale debt securities (see Note 4) and is presented net of tax. Accumulated unrealized loss on available-for-sale debt securities at the end of fiscal year 2024 was $ 0.4 million before tax, with an associated tax amount of $ 0.1 million, resulting in a net unrealized loss of $ 0.3 million. Accumulated unrealized loss on available-for-sale debt securities at the end of fiscal year 2023 was $ 0.8 million, with an associated tax amount of $ 0.2 million, for a net unrealized loss of $ 0.6 million. Treasury Stock. We record repurchases of our common stock as treasury stock at cost. As we do not have a formal retirement plan for the shares acquired, and the ultimate disposition has not yet been decided, we show the cost of the acquired stock separately as a deduction from equity. Beginning Janua ry 1, 2023, the Inflation Reduction Act of 2022 imposed a 1% excise tax on the aggregate fair market value of stock repurchased by certain corporations during the taxable year, subject to adjustments. We have calculated the excise tax on purchases from the effective date through March 30, 2024, and this amount is recorded as an increase in our Treasury Sto ck. F-13 Table of Contents Net Income Per Share. Basic earnings per common share is computed based on the weighted-average number of common shares outstanding during the reporting period. Diluted earnings per common share is computed based on the combination of dilutive common share equivalents, comprised of shares issuable under the Company's stock-based compensation plans and the weighted-average number of common shares outstanding during the reporting period. Dilutive common share equivalents include the dilutive effect of in-the-money options to purchase shares, which is calculated based on the average share price for each period using the treasury stock method (see Note 19). Recently Issued or Adopted Accounting Pronouncements. From time to time, new accounting pronouncements are issued by the FASB and other regulatory bodies that are adopted as of the specified effective dates. Unless otherwise discussed, management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on the Company's Consolidated Financial Statements upon adoption. 2. Revenue from Contracts with Customers Revenues are recognized when a good or service is transferred to a customer. A good or service is transferred when, or as, the customer obtains control of that good or service. Revenues are based on the consideration expected to be received in connection with our promises to deliver goods and services to the customers. Site Improvements on Retail Sales. We recognize sales of subcontracted ancillary services, such as preparation of the home site or other exterior enhancements. Such services are provided as a convenience to the customer. As we are involved in the selection of subcontractors and ultimately responsible for execution of these services, under FASB ASC 606, Revenue from Contracts with Customers , we recognize the sale of these ancillary services on a gross basis. The revenues associated with these programs for fiscal years 2024, 2023 and 2022 were $ 57.6 million, $ 53.3 million and $ 43.9 million, respectively. Additional Items . Expected consideration, and therefore revenue, reflects reductions for returns, allowances and other incentives, some of which may be contingent on future events. Additionally, our volume rebates are accrued at the time of sale and are recorded as a reduction of Net revenue. In customer contracts for retail sales of manufactured homes, consideration includes certain state and local excise taxes billed to customers when those taxes are levied directly upon us by the taxing authorities. Expected consideration excludes sales and other taxes collected on behalf of taxing authorities. We elect to treat consideration for freight performed as a fulfillment activity. Therefore, Net revenue includes consideration for freight and other fulfillment activities performed prior to the customer obtaining control of the goods. Practical Expedients and Exemptions. We generally expense sales commissions when incurred because the amortization period would be one-year or less. These costs are recorded within Selling, general and administrative expenses. In addition, we do not disclose the value of unsatisfied performance obligations for contracts with an expected length of one-year or less. Disaggregation of Revenue . The following table summarizes Net revenue disaggregated by reportable segment and source (in thousands). All revenue from customers is recognized at a point in time, either when the customer takes delivery or when a third-party insurance contract is executed, as more fully discussed above. F-14 Table of Contents March 30, 2024 April 1, 2023 April 2, 2022 Factory-built housing Home sales $ 1,631,650 $ 2,017,399 $ 1,495,940 Delivery, setup and other revenues 84,957 52,051 60,343 1,716,607 2,069,450 1,556,283 Financial services Insurance agency commissions received from third-party insurance companies 4,258 3,754 4,055 All other sources 73,927 69,509 66,820 78,185 73,263 70,875 $ 1,794,792 $ 2,142,713 $ 1,627,158 3. Restricted Cash Restricted cash consisted of the following (in thousands): March 30, 2024 April 1, 2023 Cash related to CountryPlace customer payments to be remitted to third parties $ 12,993 $ 11,123 Other restricted cash 3,073 940 16,066 12,063 Less current portion ( 15,481 ) ( 11,728 ) $ 585 $ 335 Corresponding amounts for customer payments to be remitted to third parties are recorded in Accounts payable. The following table provides a reconciliation of Cash and cash equivalents and Restricted cash reported within the Consolidated Balance Sheets to the combined amounts shown in the Consolidated Statements of Cash Flows (in thousands): March 30, 2024 April 1, 2023 April 2, 2022 Cash and cash equivalents $ 352,687 $ 271,427 $ 244,150 Restricted cash 16,066 12,063 15,184 $ 368,753 $ 283,490 $ 259,334 F-15 Table of Contents 4. Investments Investments consisted of the following (in thousands): March 30, 2024 April 1, 2023 Available-for-sale debt securities $ 18,669 $ 18,555 Marketable equity securities 11,961 9,989 Non-marketable equity investments 4,956 5,073 35,586 33,617 Less short-term investments ( 18,270 ) ( 14,978 ) $ 17,316 $ 18,639 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. We record investments in fixed maturity securities classified as available-for-sale at fair value and record the difference between fair value and cost in AOCI. 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): March 30, 2024 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Residential mortgage-backed securities $ 2,933 $ — $ ( 68 ) $ 2,865 State and political subdivision debt securities 5,041 7 ( 118 ) 4,930 Corporate debt securities 11,117 4 ( 247 ) 10,874 $ 19,091 $ 11 $ ( 433 ) $ 18,669 April 1, 2023 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Residential mortgage-backed securities $ 2,567 $ — $ ( 79 ) $ 2,488 State and political subdivision debt securities 6,023 — ( 254 ) 5,769 Corporate debt securities 10,745 — ( 447 ) 10,298 $ 19,335 $ — $ ( 780 ) $ 18,555 F-16 Table of Contents The following tables show gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities had been in a continuous unrealized loss position (in thousands): March 30, 2024 Less than 12 Months 12 Months or Longer Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses Residential mortgage-backed securities $ 2,014 $ ( 24 ) $ 833 $ ( 44 ) $ 2,847 $ ( 68 ) State and political subdivision debt securities 493 ( 1 ) 3,442 ( 117 ) 3,935 ( 118 ) Corporate debt securities 397 ( 3 ) 8,501 ( 244 ) 8,898 ( 247 ) $ 2,904 $ ( 28 ) $ 12,776 $ ( 405 ) $ 15,680 $ ( 433 ) April 1, 2023 Less than 12 Months 12 Months or Longer Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses Residential mortgage-backed securities $ 1,345 $ ( 10 ) $ 1,117 $ ( 69 ) $ 2,462 $ ( 79 ) State and political subdivision debt securities 251 — 4,792 ( 254 ) 5,043 ( 254 ) Corporate debt securities 4,902 ( 136 ) 5,396 ( 311 ) 10,298 ( 447 ) $ 6,498 $ ( 146 ) $ 11,305 $ ( 634 ) $ 17,803 $ ( 780 ) We are not aware of any changes to the securities or issuers that would indicate the losses above are indicative of credit impairment as of March 30, 2024. Further, we do not intend to, and it is more likely than not that we will not be required to, sell the investments before recovery of their amortized cost. 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. March 30, 2024 Amortized Cost Fair Value Due in less than one year $ 6,420 $ 6,310 Due after one year through five years 9,352 9,107 Due after five years through ten years 225 227 Due after ten years 161 160 Mortgage-backed securities 2,933 2,865 $ 19,091 $ 18,669 We recognize investment gains and losses on available-for-sale debt securities when we sell or otherwise dispose of securities using the specific identification method. There were no gross gains realized on the sale of available-for-sale debt securities in either fiscal year 2024 or 2023 and an insignificant amount of gross gains was realized in fiscal year 2022. There were no gross losses realized on the sale of available-for-sale debt securities in fiscal years 2024, 2023 or 2022. F-17 Table of Contents We recognize unrealized gains and losses on marketable equity securities from changes in market prices during the period as a component of earnings in the Consolidated Statements of Comprehensive Income. See Note 1 for further discussion. Net investment gains and losses on marketable equity securities for fiscal years 2024, 2023 and 2022 were as follows (in thousands): Year Ended March 30, 2024 April 1, 2023 April 2, 2022 Marketable equity securities: Net gain recognized during the period $ 1,869 $ 561 $ 2,160 Less: Net (gains) recognized on securities sold during the period ( 348 ) ( 958 ) ( 551 ) Unrealized gains (losses) recognized during the period on securities still held $ 1,521 $ ( 397 ) $ 1,609 5. Inventories Inventories consisted of the following (in thousands): March 30, 2024 April 1, 2023 Raw materials $ 78,241 $ 92,045 Work in process 27,977 29,022 Finished goods 135,121 142,083 $ 241,339 $ 263,150 6. Consumer Loans Receivable The following table summarizes consumer loans receivable (in thousands): March 30, 2024 April 1, 2023 Loans held for investment, previously securitized $ 16,968 $ 21,000 Loans held for investment 12,826 13,117 Loans held for sale 15,140 10,846 Construction advances 722 706 45,656 45,669 Deferred financing fees and other, net ( 523 ) ( 368 ) Allowance for loan losses ( 1,066 ) ( 1,153 ) 44,067 44,148 Less current portion ( 20,713 ) ( 17,019 ) $ 23,354 $ 27,129 F-18 Table of Contents The allowance for loan losses reflects our judgment of the probable loss exposure on loans held for investment. 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): March 30, 2024 April 1, 2023 Allowance for loan losses at beginning of fiscal year $ 1,153 $ 2,115 Change in estimated loan losses, net ( 87 ) ( 944 ) Charge-offs — ( 37 ) Recoveries — 19 Allowance for loan losses at end of fiscal year $ 1,066 $ 1,153 The consumer loans held for investment had the following characteristics: March 30, 2024 April 1, 2023 Weighted average contractual interest rate 8.1 % 8.2 % Weighted average effective interest rate 10.4 % 8.8 % Weighted average months to maturity 196 150 The following table is a consolidated summary of the delinquency status of the outstanding amortized cost of consumer loans receivable (in thousands): March 30, 2024 April 1, 2023 Current $ 43,810 $ 43,252 31 to 60 days 1,063 1,247 61 to 90 days 131 213 91+ days 652 957 $ 45,656 $ 45,669 The following table disaggregates gross consumer loans receivable by credit quality indicator at loan inception and fiscal year of origination (in thousands): March 30, 2024 2024 2023 2022 2021 2020 Prior Total Prime- FICO score 680 and greater $ 14,107 $ 328 $ 96 $ 885 $ 1,808 $ 14,425 $ 31,649 Near Prime- FICO score 620-679 1,633 — — 1,202 942 8,684 12,461 Sub-Prime- FICO score less than 620 — — — 18 49 723 790 No FICO score 447 — — — — 309 756 $ 16,187 $ 328 $ 96 $ 2,105 $ 2,799 $ 24,141 $ 45,656 F-19 Table of Contents April 1, 2023 2023 2022 2021 2020 2019 Prior Total Prime- FICO score 680 and greater $ 9,471 $ 185 $ 1,051 $ 1,982 $ 1,191 $ 16,601 $ 30,481 Near Prime- FICO score 620-679 1,695 — 1,012 1,131 1,550 8,244 13,632 Sub-Prime- FICO score less than 620 84 — 19 51 — 1,033 1,187 No FICO score — — — — 24 345 369 $ 11,250 $ 185 $ 2,082 $ 3,164 $ 2,765 $ 26,223 $ 45,669 Loan contracts secured by geographically concentrated collateral could experience higher rates of delinquencies, default and foreclosure losses than loan contracts secured by collateral that is more geographically dispersed. As of March 30, 2024, 46 % of the outstanding principal balance of the consumer loans receivable portfolio was concentrated in Texas and 10 % was concentrated in Florida. As of April 1, 2023, 44 % of the outstanding principal balance of the consumer loans receivable portfolio was concentrated in Texas and 13 % was concentrated in Florida. Other than Texas and Florida, no state had concentrations in excess of 10% of the principal balance of consumer loans receivable as of March 30, 2024 or April 1, 2023. Collateral for repossessed loans is acquired through foreclosure or similar proceedings and is recorded at the estimated fair value of the home l ess the estimated costs to sell. At repossession, the fair value of the collateral is determined based on the historical recovery rates of previously charged-off loans; the loan is charged off and the loss is recorded to the allowance for loan losses. On a monthly basis, the fair value of the collateral is adjusted to the lower of the amount recorded at repossession or the estimated sales price less estimated costs to sell, based on current information. Repossessed homes totaled approximately $ 0.7 million as of March 30, 2024 and $ 1.1 million as of April 1, 2023, and are included in Pre paid expenses and other current assets in the Consolidated Balance Sheets. Foreclosure or similar proceedings in progress totaled approximately $ 0.4 million and $ 0.5 million as of March 30, 2024 and April 1, 2023, 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 . We also provide loans to independent floor plan lenders that then lend to distributors to finance their inventory purchases. The notes are secured by the homes as collateral and, in some instances, other security. Other terms of direct arrangements vary, depending on the needs of the borrower and the opportunity for the Company. Commercial loans receivable, net consisted of the following (in thousands): March 30, 2024 April 1, 2023 Loans receivable (including from affiliates) $ 91,938 $ 103,726 Allowance for loan losses ( 781 ) ( 1,586 ) Deferred financing fees, net ( 116 ) ( 163 ) 91,041 101,977 Less current portion of commercial loans receivable (including from affiliates), net ( 43,316 ) ( 44,054 ) $ 47,725 $ 57,923 F-20 Table of Contents The commercial loans receivable balance had the following characteristics: March 30, 2024 April 1, 2023 Weighted average contractual interest rate 7.4 % 7.6 % Weighted average months outstanding 12 9 The risk of loss is spread over numerous borrowers. Borrower activity is monitored on a regular basis and contractual arrangements are in place to provide adequate loss mitigation in the event of a default. Historically, we have been able to sell repossessed homes, thereby mitigating loss exposure. If a default occurs and collateral is lost, we are exposed to loss of the full value of the home loan. We evaluate the potential for loss from the commercial loan programs on a collective basis, aggregating similar loans based on their terms. Our evaluation also considers the borrower's risk rating, overall financial stability, historical experience and estimates of other economic factors. 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): March 30, 2024 April 1, 2023 Balance at beginning of fiscal year $ 1,586 $ 1,011 Change in estimated loan losses, net ( 805 ) 575 Balance at end of fiscal year $ 781 $ 1,586 Loans are subject to regular review and are given management's attention whenever a problem situation appears to be developing. Loans with indicators of potential performance problems are placed on watch list status and are subject to additional monitoring and scrutiny. Nonperforming status includes loans accounted for on a non-accrual basis and accruing loans with principal payments 90 days or more past due. Our policy is to place loans on nonaccrual status when interest is past due and remains unpaid 90 days or more or when there is a clear indication that the borrower is unable or unwilling to make payments as they become due. We will resume accrual of interest once these factors have been remedied. Payments received on non-accrual loans are recorded on a cash basis, first to interest and then to principal, and charge-offs occur when it becomes probable that outstanding amounts will not be recovered. At March 30, 2024, 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. The following table disaggregates our commercial loans receivable by credit quality indicator and fiscal year of origination (in thousands): March 30, 2024 2024 2023 2022 2021 2020 Total Performing $ 57,691 $ 25,066 $ 4,823 $ 2,144 $ 2,214 $ 91,938 April 1, 2023 2023 2022 2021 2020 2019 Total Performing $ 80,193 $ 16,028 $ 4,071 $ 2,203 $ 1,231 $ 103,726 As of both March 30, 2024 and April 1, 2023, approximately 18 % of our outstanding commercial loans receivable principal balance was concentrated in New York. No other state had concentrations in excess of 10% of the principal balance of the commercial loans receivable as of March 30, 2024 or April 1, 2023. We had concentrations with one independent third-party and its affiliates that equaled 13 % and 12 % of the net commercial loans receivable principal balance outstanding, all of which was secured, as of March 30, 2024 and April 1, 2023, respectively. The risks created by these concentrations have been considered in the determination of the adequacy of the allowance for loan losses. F-21 Table of Contents 8. Property, Plant and Equipment, net Property, plant and equipment, net, consisted of the following (in thousands): March 30, 2024 April 1, 2023 Property, plant and equipment, at cost: Buildings and improvements $ 171,516 $ 167,291 Machinery and equipment 81,142 76,826 Land 39,822 39,822 Construction in progress 8,405 5,472 300,885 289,411 Accumulated depreciation ( 76,686 ) ( 61,133 ) $ 224,199 $ 228,278 Depreciation expense was $ 17.0 million in fiscal year 2024, $ 14.8 million in fiscal year 2023 and $ 9.6 million in fiscal year 2022. Included in the balances above are certain assets under finance leases. See Note 9 for additional information. 9. Leases We lease certain production and retail locations, office space and equipment. We determine if a contract or arrangement is, or contains, a lease at inception. Lease agreements with an initial term of 12 months or less are not recorded in the Consolidated Balance Sheets. Certain lease agreements include one or more options to renew, with renewal terms that can extend the lease term by one to three years or more. Generally, the exercise of lease renewal options is at our discretion. Some agreements also include options to purchase the leased property. The estimated life of assets and leasehold improvements is limited by the expected lease term, unless there is a transfer of title or purchase option that we are reasonably certain to exercise. Certain of our lease agreements include rental payments adjusted periodically for inflation. These lease agreements do not contain any material residual value guarantees or material restrictive covenants. Right of Use ("ROU") assets represent the right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments in accordance with the lease. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. Since our leases do not provide a readily determinable implicit interest rate, we estimate an incremental borrowing rate. In determining the estimated incremental borrowing rate, we consider the lease period and comparable market interest rates, as well as any other information available at the lease commencement date. The lease term includes options to extend or terminate the lease when it is reasonably certain that we will exercise such options. F-22 Table of Contents The following table provides information about the financial statement classification of our lease balances reported within the Consolidated Balance Sheets as of March 30, 2024 and April 1, 2023 (in thousands): Classification March 30, 2024 April 1, 2023 ROU assets Operating lease assets Operating lease right-of-use assets $ 39,027 $ 26,755 Finance lease assets Property, plant and equipment, net (1) 5,913 6,088 Total lease assets $ 44,940 $ 32,843 Lease Liabilities Current: Operating lease liabilities Accrued expenses and other current liabilities $ 5,303 $ 6,262 Finance lease liabilities Accrued expenses and other current liabilities 80 347 Non-current: Operating lease liabilities Operating lease liabilities 35,148 21,678 Finance lease liabilities Other liabilities 6,086 5,896 Total lease liabilities $ 46,617 $ 34,183 (1) Recorded net of accumulated amortization of $ 0.4 million and $ 0.3 million as of March 30, 2024 and April 1, 2023, respectively. The following table provides information about the financial statement classification of our lease expenses reported within the Consolidated Statements of Comprehensive Income for the years ended March 30, 2024, April 1, 2023 and April 2, 2022 (in thousands): Year Ended Lease Expense Category Classification March 30, 2024 April 1, 2023 April 2, 2022 Operating lease expense (2) Cost of sales $ 1,119 $ 1,190 $ 1,160 Selling, general and administrative expenses 4,693 4,059 3,636 Finance lease expense Amortization of leased assets Cost of sales 175 175 109 Interest on lease liabilities Interest expense 279 283 151 Total lease expense $ 6,266 $ 5,707 $ 5,056 (2) Excludes short-term and variable lease expenses, which are immaterial. Cash payments for operating and finance leases were as follows (in thousands): March 30, 2024 April 1, 2023 April 2, 2022 Operating leases $ 6,694 $ 5,609 $ 4,794 Finance leases 356 356 220 F-23 Table of Contents The present value of minimum payments for future fiscal years under non-cancelable leases as of March 30, 2024 was as follows (in thousands): Operating Leases Finance Leases Total 2025 $ 7,074 $ 356 $ 7,430 2026 7,396 356 7,752 2027 4,870 356 5,226 2028 3,979 356 4,335 2029 3,810 356 4,166 Thereafter 24,305 10,230 34,535 51,434 12,010 63,444 Less: Amount representing interest ( 10,983 ) ( 5,844 ) ( 16,827 ) $ 40,451 $ 6,166 $ 46,617 The following table provides information about the weighted average remaining lease terms and weighted average discount rates as of March 30, 2024: Remaining Lease Term (Years) Discount Rate Operating leases 10.3 4.9 % Finance leases 33.8 4.5 % 10. Goodwill and Other Intangibles Goodwill and other intangibles, net, consisted of the following (in thousands): March 30, 2024 April 1, 2023 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Indefinite-lived: Goodwill $ 121,934 $ — $ 121,934 $ 114,547 $ — $ 114,547 Trademarks and trade names 16,980 — 16,980 16,980 — 16,980 State insurance licenses 1,100 — 1,100 1,100 — 1,100 140,014 — 140,014 132,627 — 132,627 Finite lived: Customer relationships 15,000 ( 5,314 ) 9,686 16,900 ( 5,818 ) 11,082 Other 1,114 ( 659 ) 455 1,114 ( 486 ) 628 $ 156,128 $ ( 5,973 ) $ 150,155 $ 150,641 $ ( 6,304 ) $ 144,337 F-24 Table of Contents At April 1, 2023 and March 30, 2024, the Company had Goodwill of $ 114,547 and $ 121,934 , respectively. The change is due to current year acquisitions and adjustments to prior year acquisitions. All Goodwill resides in the Factory-built housing segment. At March 30, 2024 there are no accumulated impairment losses related to Goodwill. Amortization expense recognized on intangible assets was $ 1.6 million during fiscal year 2024, $ 2.1 million during fiscal year 2023 and $ 1.4 million during fiscal year 2022. Customer relationships have a weighted average remaining life of 6.9 years and other finite lived intangibles have a weighted average remaining life of 2.5 years. Expected amortization for future fiscal years is as follows (in thousands): 2025 $ 1,530 2026 1,488 2027 1,415 2028 1,299 2029 1,265 Thereafter 3,144 $ 10,141 11. Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consisted of the following (in thousands): March 30, 2024 April 1, 2023 Customer deposits $ 40,856 $ 45,193 Salaries, wages and benefits 38,125 47,100 Unearned insurance premiums 33,449 27,901 Estimated warranties 31,718 31,368 Accrued volume rebates 21,167 22,858 Accrued self-insurance 14,124 11,467 Other 60,297 76,774 $ 239,736 $ 262,661 12. Warranties Activity in the liability for estimated warranties for fiscal years 2024, 2023 and 2022 was as follows (in thousands): March 30, 2024 April 1, 2023 April 2, 2022 Balance at beginning of fiscal year $ 31,368 $ 26,250 $ 18,032 Purchase accounting additions — 1,250 5,909 Charged to costs and expenses 60,219 50,157 40,678 Payments and deductions ( 59,869 ) ( 46,289 ) ( 38,369 ) Balance at end of fiscal year $ 31,718 $ 31,368 $ 26,250 F-25 Table of Contents 13. Other Liabilities The following table summarizes secured financings and other obligations (in thousands): March 30, 2024 April 1, 2023 Finance lease liabilities $ 6,166 $ 6,243 Other secured financing 1,916 2,379 Mandatorily redeemable noncontrolling interest — 2,268 8,082 10,890 Less current portion included in Accrued expenses and other current liabilities ( 323 ) ( 3,070 ) $ 7,759 $ 7,820 Scheduled maturities for future fiscal years of the Company's obligations consist of the following (in thousands). 2025 $ 323 2026 306 2027 287 2028 277 2029 265 Thereafter 6,624 $ 8,082 Actual payments may vary from those above, resulting from prepayments or other factors. See Note 9 for further discussion of the finance lease obligations. 14. Debt On November 22, 2022, we entered into a Credit Agreement among the Company, Bank of America, N.A., as administrative agent, swing line lender and letter of credit issuer, and the guarantors party thereto (the "Credit Agreement"), providing for a $ 50 million revolving credit facility (the "Revolving Credit Facility"), which may be increased from time to time through adding one or more tranches of term loans (each an "Incremental Term Facility") up to an aggregate amount of $ 100 million. The Credit Agreement matures on November 22, 2027. Loans under the Revolving Credit Facility and any Incremental Term Facilities will bear interest at a rate equal to (i) the Secured Overnight Financing Rate, plus a credit spread adjustment of 0.10 % (as adjusted, "Term SOFR"), plus the "applicable rate" or (ii) the "base rate" (defined as the highest of (a) the Bank of America prime rate, (b) the Federal Funds rate plus 0.50 %, and (c) Term SOFR plus 1.00 %) plus the "applicable rate." The applicable rate will be determined in accordance with a pricing grid based on the Company's Consolidated Total Leverage Ratio (as defined in the Credit Agreement) ranging from 1.125 % to 1.350 % per annum for Term SOFR rate loans and from 0.125 % to 0.350 % per annum for base rate loans. In addition, the Company will pay a commitment fee on the unused portion of the Revolving Credit Facility of 0.15 % per annum. The Revolving Credit Facility is recourse to certain of the Company's subsidiaries, on a joint and several basis as guarantors, but is unsecured. The Credit Agreement includes the following financial covenants: (i) as of the end of any fiscal quarter, the Consolidated Total Leverage Ratio (as defined in the Credit Agreement) cannot exceed 3.25 to 1.00 and (ii) a requirement to maintain Consolidated EBITDA (as defined in the Credit Agreement) for any period of four fiscal quarters of at least $ 75 million. The Credit Agreement also contains customary representations and warranties, and affirmative negative covenants. F-26 Table of Contents As of March 30, 2024, there were no borrowings outstanding under the Revolving Credit Facility and we were in compliance with all covenants. 15. Reinsurance and Insurance Loss Reserves Standard Casualty is primarily a specialty writer of manufactured home physical damage insurance. Certain of our premiums and benefits are assumed from and ceded to other insurance companies under various reinsurance agreements. The ceded reinsurance agreements provide increased capacity to write larger risks while maintaining exposure to loss within our capital resources. We remain obligated for amounts ceded in the event that the reinsurers do not meet their obligations. Substantially all of the assumed reinsurance is with one entity. The effects of reinsurance on premiums written and earned were as follows (in thousands): Year Ended March 30, 2024 April 1, 2023 Written Earned Written Earned Direct premiums $ 47,448 $ 39,352 $ 32,671 $ 29,775 Assumed premiums—nonaffiliated 37,426 35,630 34,153 32,809 Ceded premiums—nonaffiliated ( 26,273 ) ( 26,273 ) ( 18,300 ) ( 18,300 ) $ 58,601 $ 48,709 $ 48,524 $ 44,284 Typical insurance policies written or assumed have a maximum coverage of $ 0.4 million per claim, of which we cede $ 0.2 million of the risk of loss per reinsurance. Therefore, our risk of loss is limited to $ 0.2 million 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 $ 4.0 million per occurrence, up to a maximum of $ 110.0 million in the aggregate for that occurrence. Purchasing reinsurance contracts mitigates the frequency and/or severity of losses incurred on insurance policies issued, such as in the case of a catastrophe that generates a large number of serious claims on multiple policies at the same time. Under these agreements, we may be required to repurchase and reestablish the reinsurance contracts for the remainder of the year to the extent that they have been utilized. Standard Casualty establishes reserves for claims and claims expense on reported and IBNR claims of non-reinsured losses. The following details the activity in the reserve for fiscal years 2024, 2023 and 2022 (in thousands): March 30, 2024 April 1, 2023 April 2, 2022 Balance at beginning of fiscal year $ 10,939 $ 8,149 $ 7,451 Net incurred losses during the year 37,490 33,466 25,962 Net claim payments during the year ( 37,889 ) ( 30,676 ) ( 25,264 ) Balance at end of fiscal year $ 10,540 $ 10,939 $ 8,149 16. Income Taxes The provision for income taxes generally represents income taxes paid or payable for the current year plus the change in deferred taxes during the year. The following details the provision for income taxes for fiscal years 2024, 2023 and 2022 (in thousands): F-27 Table of Contents 2024 2023 2022 Current Federal $ 36,023 $ 51,190 $ 7,271 State 8,094 12,709 8,768 Foreign 218 50 — 44,335 63,949 16,039 Deferred Federal ( 2,884 ) 2,705 ( 1,257 ) State ( 98 ) ( 732 ) ( 535 ) Foreign ( 78 ) — — ( 3,060 ) 1,973 ( 1,792 ) $ 41,275 $ 65,922 $ 14,247 A reconciliation of income taxes computed by applying the expected federal statutory income tax rate of 21 % for fiscal years 2024, 2023 and 2022 to income before income taxes reported in the Consolidated Statements of Comprehensive Income is as follows (in thousands): 2024 2023 2022 Federal income tax at statutory rate $ 41,828 $ 64,420 $ 44,518 State income taxes, net of federal benefit 7,984 12,172 8,075 Tax credits ( 6,662 ) ( 10,847 ) ( 37,488 ) Other ( 1,875 ) 177 ( 858 ) $ 41,275 $ 65,922 $ 14,247 Net deferred tax assets and liabilities were as follows (in thousands): March 30, 2024 April 1, 2023 Net deferred tax (liabilities) assets Goodwill $ ( 17,080 ) $ ( 16,041 ) Property, plant and equipment ( 14,678 ) ( 16,763 ) Warranty reserves 7,668 7,355 Lease - Operating lease liability 7,446 6,323 Lease - Right of use assets ( 7,108 ) ( 6,050 ) Research and experimentation expenditures 5,940 2,712 Salaries and wages 3,176 3,675 Inventory 2,913 2,151 Accrued volume rebates 2,868 2,713 Other 4,280 6,344 $ ( 4,575 ) $ ( 7,581 ) The effective income tax rate for the current year was positively impacted by the recognition of tax credits. Of the total tax credits, $ 4.2 million related to the sale of energy efficient homes and Energy Star credits available under the Internal Revenue Code §45L and $ 2.4 million related to the Research and Development, Solar, and Work Opportunity Tax Credits. The §45L tax credit was initially established under the Federal Energy Policy Act of 2005 and was extended through December 31, 2032 by the Inflation Reduction Act of 2022. F-28 Table of Contents We recorded an insignificant amount of unrecognized tax benefits during fiscal years 2024, 2023 and 2022, and there would be an insignificant effect on the effective tax rate if all unrecognized tax benefits were recognized. We classify interest and penalties related to unrecognized tax benefits in income tax expense. The total amount of unrecognized tax benefit related to any particular tax position is not anticipated to change significantly within the next 12 months. We believe that our income tax filing positions and deductions will be sustained on audit and we do not anticipate any adjustments that will result in a material change to our financial position. We periodically evaluate the deferred tax assets based on the requirements established in ASC 740, which requires the recording of a valuation allowance when it is more likely than not that some portion or all of the deferred tax assets will not be realized. The determination of the need for, or amount of, any valuation allowance involves significant management judgment and is based upon the evaluation of both positive and negative evidence, including management projections of anticipated taxable income. At March 30, 2024, we had state net operating loss carryforwards totaling $ 3.5 million, which begin to expire in 2038, and no associated valuation allowance. We have evaluated our historical profits earned and forecasted taxable income and determined that all of the deferred tax assets would be utilized in future periods. Ultimate realization of the deferred tax assets depends on our ability to continue to earn profits, as we have historically, and to meet these forecasts in future periods. Income tax returns are filed in the U.S. federal jurisdiction in several state jurisdictions, and in Mexico. In general, we are no longer subject to examination by the IRS or state and local income tax examinations by tax authorities for years before fiscal year 2020; however, we have filed refund claims for fiscal 2018 and 2020 which are currently being processed by the IRS. 17. 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 risk of loss under these agreements is spread over numerous distributors. The price we may be obligated to pay generally declines over the period of the agreement (generally 18 to 24 months, calculated from the date of sale to the distributor) and the risk of loss is further reduced by the resale value of the repurchased homes. The maximum amount for which the Company was liable under such agreements approximated $ 121 million at March 30, 2024, $ 178 million at April 1, 2023 and $ 141 million at April 2, 2022, without reduction for the resale value of the homes. During the fourth quarter of fiscal 2024, we received two repurchase demand notices. The inventory was obtained and resold to other dealers during the quarter at an immaterial loss. For all of fiscal 2024, we received five demand notices covering 11 homes. Our reserve for repurchase commitments was $ 2.9 million at March 30, 2024 and $ 5.2 million at April 1, 2023. Constru ction-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. Subsequent advances are contingent upon the performance of contractual obligations by the seller of the home and the borrower. Cumulative advances on construction-period mortgages are carried at the amount advanced less a valuation allowance, and are included in Consumer loans receivable, net. The total loan contract amount, less cumulative advances, represents an off-balance sheet contingent commitment to fund future advances. Loan contracts with off-balance sheet commitments are summarized below (in thousands): March 30, 2024 April 1, 2023 Construction loan contract amount $ 1,960 $ 2,214 Cumulative advances ( 722 ) ( 706 ) $ 1,238 $ 1,508 F-29 Table of Contents Representations and Warranties of Mortgages Sold . We sell loans to 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. These representations and warranties generally relate to the ownership of the loan, the validity of the lien securing the loan, the loan's compliance with the criteria for inclusion in the sale transaction, including compliance with underwriting standards or loan criteria established by the buyer, and our ability to deliver documentation in compliance with applicable laws. Generally, representations and warranties may be enforced at any time over the life of the loan. Upon a breach of a representation, we may be required to repurchase the loan or to indemnif y a party for incurred losses. Repurchase demands and claims for indemnification payments are reviewed on a loan-by-loan basis to validate if there has been a breach requiring repurchase. We manage the risk of repurchase through underwriting and quality assurance practices and by servicing the mortgage loans to investor standards. We maintain a reserve for these contingent repurchase and indemnification obligations. This reserve of $ 0.6 million as of March 30, 2024 and $ 0.7 million as of April 1, 2023, included in Accrued expenses and other current liabilities, reflects management's estimate of probable loss. We consider a variety of assumptions, including borrower performance (both actual and estimated future defaults), historical repurchase demands and loan default rates to estimate the liability for loan repurchases and indemnifications. There were no claim requests that resulted in the repurchase of a loan during the year ended March 30, 2024. In addition, we are subject to minimum net worth requirements and were in compliance for the year ended March 30, 2024. Interest Rate Lock Commitments . In originating loans for sale, we issue interest rate lock commitments ("IRLCs") to prospective borrowers. These IRLCs represent an agreement to extend credit to a loan applicant, whereby the interest rate on the loan is set prior to loan closing or sale. These IRLCs bind 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 such, outstanding IRLCs are subject to interest rate risk and related loan sale price risk during the period from the date of the IRLC through the earlier of the loan sale date or IRLC expiration date. The lock commitments generally range between 30 and 180 days; however, borrowers are not obligated to close the related loans. As a result, we are subject to fallout risk related to IRLCs, which is realized if approved borrowers choose not to close on the loans within the terms of the IRLCs unless the commitment is successfully paired with another loan that may mitigate losses from fallout. As of March 30, 2024, we had outstanding IRLCs with a notional amount of $ 39.0 million, which are recorded at fair value in accordance with FASB ASC 815, Derivatives and Hedging ("ASC 815"). ASC 815 clarifies that the expected net future cash flows related to the associated servicing of a loan should be included in the measurement of all written loan commitments that are accounted for at fair value through earnings. The estimated fair value of IRLCs is recorded in Prepaid expenses and other current assets if in a net favorable position, or Accrued expenses and other current liabilities if in a net unfavorable position, in the Consolidated Balance Sheets. The fair value of IRLCs is based on the value of the underlying loan adjusted for: (1) estimated cost to complete and originate the loan and (2) the estimated percentage of IRLCs that will result in closed loans. The initial and subsequent changes in the value of IRLCs are a component of gain (loss) on loans held for sale. During fiscal year 2024 we recognized an insignificant non-cash loss on outstanding IRLCs. During fiscal years 2023 and 2022 we recognized insignificant non-cash gain s on outstanding IRLCs. 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 and whole loan sale commitments (collectively "Commitments"). As of March 30, 2024, we had $ 2.8 million in outstanding Commitments. Commitments for forward sales of whole loans are typically in an amount proportionate with the amount of IRLCs expected to close in particular time frames, assuming no change in mortgage interest rates, for the respective loan products intended for whole loan sale. The estimated fair values of Commitments are based on quoted market values and are recorded within Prepaid expenses and other current assets in the Consolidated Balance Sheets. During the fiscal year ended March 30, 2024, we recognized an insignificant non-cash gain on Commitments . During the fiscal years ended April 1, 2023 and April 2, 2022, we recognized non-cash losses of $ 0.3 million and $ 0.1 million, respectively, on Commitments. F-30 Table of Contents 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 ("former CEO") and the Company's former Chief Financial Officer ("former CFO"), alleging violations of the antifraud and internal accounting control provisions of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), based on trading in the shares of another company directed by the former CEO. In fiscal 2022, the Company recorded an accrual relating to this loss contingency. On September 23, 2022, the United States District Court for the District of Arizona approved the settlement of the SEC action against the Company. Without admitting or denying the findings of the consent judgment, the Company agreed to the imposition of an injunction against future violations of the antifraud and internal accounting control provisions of the Exchange Act and a monetary penalty of $ 1.5 million, which did not have a material impact on the Company's financial statements (collectively, the "SEC Litigation"). The settlement resolved all claims in the SEC Litigation against the Company. In May 2024, the SEC settled all outstanding claims against our former CFO thereby closing all SEC Litigation matters. 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 that may currently be unknown to management will determine whether the resolution of pending or threatened litigation or claims will ultimately have a material effect on our consolidated financial position, liquidity or results of operations in any future reporting periods. 18. Stock-Based Compensation The Company maintains stock incentive plans whereby stock option grants or awards of RSUs may be made to certain officers, directors and key employees. In August 2023, our shareholders approved the 2023 Omnibus Equity Incentive Plan (the “Plan”). The Plan supersedes and replaces the Company’s 2005 Stock Incentive Plan, as amended (the “2005 Plan”). No further awards will be made pursuant to the 2005 Plan; provided, that the 2005 Plan shall remain in effect until all awards granted under the 2005 Plan have vested or been exercised, forfeited, cancelled, or have otherwise expired or terminated in accordance with the terms of such grants. The Plan permits the award of up to 550,000 shares of the Company's common stock, of which 549,299 shares were still available for grant as of March 30, 2024. The exercise price of stock option awards may not be below 100 % of the fair market value of the Company's common stock at the date of grant. Stock options vest over a defined period as determined by the plan administrator (the Compensation Committee of the Board, which consists of independent directors), but typically is no more than five years and generally expire seven years from the date of grant. Upon option exercise, new shares of the Company's common stock are issued. Service-based RSUs vest over a defined period, typically three years . Performance-based RSUs vest based on the achievement of certain criteria, determined by the plan administrator, over the measurement period which is generally three years . When RSUs vest, unrestricted shares are issued. The stock incentive plans provide for accelerated vesting of stock option awards and RSUs when the participant is involuntarily terminated upon a change in control (as defined in the plans). We apply the fair value recognition provisions of ASC 718, Compensation - Stock Compensation . Stock compensation expense was approximately $ 6.8 million, $ 6.3 million and $ 5.1 million for fiscal years 2024, 2023 and 2022, respectively. As of March 30, 2024, total unrecognized compensation cost was approximately $ 8.0 million and the related weighted-average period over which it is expected to be recognized is approximately 1.77 years. F-31 Table of Contents Stock Options. The following table summarizes stock option activity for fiscal years 2024, 2023 and 2022: Number of Shares Weighted Average Exercise Price per share Weighted Average Remaining Contractual Term (years) Aggregate Intrinsic Value (in thousands) Outstanding at April 3, 2021 251,749 $ 146.86 4.04 $ 34,266 Exercised ( 53,550 ) 107.58 Forfeited, canceled or expired ( 5,286 ) 164.49 Outstanding at April 2, 2022 192,913 $ 157.23 3.34 $ 16,724 Exercised ( 44,237 ) 137.28 Forfeited, canceled or expired ( 5,100 ) 241.23 Outstanding at April 1, 2023 143,576 $ 160.40 2.88 $ 22,591 Exercised ( 48,637 ) 145.38 Forfeited, canceled or expired ( 538 ) 183.83 Outstanding at March 30, 2024 94,401 $ 168.00 2.21 $ 21,812 Exercisable at April 2, 2022 126,948 $ 149.90 2.82 $ 11,941 Exercisable at April 1, 2023 116,434 $ 155.38 2.70 $ 18,887 Exercisable at March 30, 2024 89,474 $ 167.13 2.15 $ 20,752 There were no grants of stock options in fiscal years 2024, 2023 or 2022. The total intrinsic value of options exercised during fiscal years 2024, 2023 and 2022 was $ 7.8 million, $ 5.7 million and $ 7.9 million, respectively. Restricted Stock Awards. A summary of RSU activity for fiscal years 2024, 2023 and 2022 is as follows: Number of Service-based units Weighted Average Grant Date Fair Value per share Outstanding at April 3, 2021 4,585 $ 177.08 Awarded 16,902 233.60 Released ( 3,335 ) 180.83 Forfeited ( 505 ) 215.90 Outstanding at April 2, 2022 17,647 $ 229.39 Awarded 18,965 227.99 Released ( 6,714 ) 234.55 Forfeited ( 1,030 ) 283.27 Outstanding at April 1, 2023 28,868 $ 225.35 Awarded 17,511 294.06 Released ( 12,541 ) 231.70 Forfeited ( 1,254 ) 250.71 Outstanding at March 30, 2024 32,584 $ 258.85 F-32 Table of Contents The total intrinsic value of RSUs released during fiscal years 2024, 2023 and 2022 was $ 3.6 million, $ 1.6 million and $ 0.8 million, respectively. Number of Performance-based units Weighted Average Grant Date Fair Value per share Outstanding at April 3, 2021 12,939 $ 163.51 Awarded 7,920 217.39 Forfeited ( 805 ) 192.64 Outstanding at April 2, 2022 20,054 $ 183.62 Awarded 11,730 209.87 Additional shares granted by performance 2,489 158.36 Released ( 8,822 ) 158.36 Outstanding at April 1, 2023 25,451 $ 202.00 Awarded 12,125 295.01 Additional shares granted by performance 1,658 167.84 Released ( 6,988 ) 167.95 Forfeited ( 2,128 ) 220.67 Outstanding at March 30, 2024 30,118 $ 244.15 Unvested target performance-based RSUs that may vest based upon performance conditions through fiscal year 2024 7,504 Unvested target performance-based RSUs that may vest based upon performance conditions through fiscal year 2025 11,187 Unvested target performance-based RSUs that may vest based upon performance conditions through fiscal year 2026 11,427 Grants of performance-based RSUs are shown in the table above at the target amount in the year of the award. Additional shares awarded based upon achievement above target specified performance criteria are shown in the table above when they vest, which is generally in the first quarter of the fiscal year following the performance year. Cancellations of target awards based upon achievement below target specified performance criteria are shown in the table above in the period they are canceled, which is generally in the first quarter of the fiscal year following the performance year. The total intrinsic value of performance based RSUs released during fiscal years 2024 and 2023 was $ 2.1 million and $ 1.9 million, respectively, and none in fiscal year 2022. Actual performance exceeded the target established for the three-year performance-based RSUs granted in fiscal year 2022. As a result, in the first quarter of fiscal year 2025, we expect 1,125 performance-based RSUs will vest and be released, in addition to the unvested target performance-based RSUs shown in the table above. F-33 Table of Contents 19. Earnings Per Share The following table sets forth the computation of basic and diluted earnings per share for fiscal years 2024, 2023 and 2022 (dollars in thousands, except per share amounts): Fiscal Year 2024 2023 2022 Net income attributable to Cavco common stockholders $ 157,817 $ 240,554 $ 197,699 Weighted average shares outstanding: Basic 8,506,673 8,844,326 9,178,593 Effect of dilutive securities 85,238 80,126 85,560 Diluted 8,591,911 8,924,452 9,264,153 Net income per share attributable to Cavco common stockholders Basic $ 18.55 $ 27.20 $ 21.54 Diluted $ 18.37 $ 26.95 $ 21.34 Anti-dilutive common stock equivalents excluded 44 174 405 Outstanding RSUs excluded, as underlying performance criteria has not yet been met 30,118 25,451 20,054 20. Fair Value Measurements The book value and estimated fair value of our financial instruments were as follows (in thousands): March 30, 2024 April 1, 2023 Book Value Estimated Fair Value Book Value Estimated Fair Value Available-for-sale debt securities (1) $ 18,669 $ 18,669 $ 18,555 $ 18,555 Marketable equity securities (2) 11,961 11,961 9,989 9,989 Non-marketable equity investments (3) 4,956 4,956 5,073 5,073 Consumer loans receivable (4) (5) 44,067 49,105 44,148 50,686 Commercial loans receivable (5) 91,041 80,764 101,977 97,106 Other secured financing (6) ( 1,916 ) ( 1,841 ) ( 2,379 ) ( 2,332 ) (1) Level 2: The fair value is based on observable market prices for identical securities. When observable market prices for identical securities are not available, we price our marketable debt instruments using non-binding market consensus prices that are corroborated with observable market data; quoted market prices for similar instruments; or pricing models, such as a discounted cash flow model, with all significant inputs derived from or corroborated with observable market data. (2) Level 1: The fair value is based on quoted market prices. (3) Level 3: The fair value approximates book value based on the non-marketable nature of the investments. (4) Level 3: Includes consumer loans receivable held for investment, held for sale and construction advances. (5) Level 3: The fair value is estimated using market interest rates of comparable loans. (6) L evel 2: The fair value is based on the discounted value of the expected remaining principal and interest cash flows. F-34 Table of Contents Consumer loans held for investment are measured using Level 3 inputs that are calculated using estimated discounted future cash flows from the evaluation of loan credit quality and performance history to determine expected prepayments and defaults on the portfolio, discounted with rates considered to reflect current market conditions. Loans held for sale are measured at the lower of cost or fair value, less costs to sell, using inputs that consist of quoted market prices for mortgage-backed securities or investor purchase commitments for similar types of loan commitments on hand from investors. The cost of loans held for sale was lower than the fair value as of March 30, 2024. Mortgage Servicing . Mortgage Servicing Rights ("MSRs") are the rights to receive a portion of the interest coupon and fees collected from the mortgagors for performing specified mortgage servicing activities, which consist of collecting loan payments, remitting principal and interest payments to investors, managing escrow accounts, performing loss mitigation activities on behalf of investors and otherwise administering the loan servicing portfolio. MSRs are recorded at fair value in Prepaid expenses and other current assets in the Consolidated Balance Sheets based on the present value of the expected future cash flows related to servicing these loans. March 30, 2024 April 1, 2023 Number of loans serviced with MSRs 3,842 4,070 Weighted average servicing fee (basis points) 34.79 34.71 Capitalized servicing multiple 188.59 % 98.99 % Capitalized servicing rate (basis points) 65.61 34.36 Serviced portfolio with MSRs (in thousands) $ 482,898 $ 520,458 MSRs (in thousands) $ 3,168 $ 1,788 21. Employee Benefit Plans We have self-funded group medical plans which are administered by third-party administrators. The medical plans have reinsurance coverage limiting liability for general individual employee loss to a maximum of $ 0.4 million. Incurred claims identified under the third-party administrator's incident reporting system and IBNR claims are accrued based on estimates that incorporate claim experience, as well as other considerations such as the nature of each claim or incident, relevant trend factors and advice from consulting actuaries when necessary. Medical claims expense was $ 32.9 million, $ 30.6 million and $ 22.8 million for fiscal years 2024, 2023 and 2022, respectively. We sponsor an employee savings plan (the "401k Plan") that is intended to provide participating employees with additional income upon retirement. Employees may contribute their eligible compensation up to federal limits to the 401k Plan. The Company match is discretionary and may be up to 50 % of the first 5 % of eligible compensation contributed by employees. For calendar year 2023, the Company match was 30 % of the first 5 % of eligible compensation contributed by employees. Employees are eligible to participate on the first of the month following 90 days of service and employer matching contributions are vested progressively over 4 years. Employer matching contribution expense was $ 3.4 million in fiscal year 2024, $ 4.0 million in fiscal year 2023 and $ 1.3 million in fiscal year 2022. Certain manufacturing facilities of The Commodore Corporation ("Commodore") participate 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. Beginning January 1, 2022, we 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. F-35 Table of Contents The Company's participation in multiemployer plans for the fiscal year ended March 30, 2024 is outlined in the table below, with the following information: • The Employer Identification Number is 51-6031295 and the three-digit plan number assigned to a plan by the Internal Revenue Service is 002. • The most recent Pension Protection Act Zone Status available is for plan years that ended in calendar years 2023 and 2022, based on information provided to the Company by the plan. A plan in the "red" zone has been determined to be in "critical status," based on criteria established under the Internal Revenue Code ("Code"), and is generally less than 65% funded. • The "RP Status Pending/Implemented" column indicates whether a Rehabilitation Plan ("RP") for plans in the "red" zone, as required by the Code, is pending or has been implemented by the plan as of the end of the plan year that ended in calendar year 2023. • The "Surcharge Imposed" column indicates whether the Company contribution rate for its fiscal year that ended on March 30, 2024 included an amount in addition to the contribution rate specified in the applicable collective bargaining agreement ("CBA"), as imposed by a plan in "critical status," in accordance with the requirements of the Code. Pension Protection Act Zone Status RP Status Pending / Implemented Contributions by the Company by fiscal year (in thousands) Expiration Date of CBAs Pension Fund 2024 2023 2024 2023 2022 Surcharge Imposed IAM National Pension Fund Red Red Implemented $ 1,364 $ 1,507 $ 312 Yes (1) (1) The expiration date of the CBA for the Pennwest manufacturing facility is February 2027, and the expiration date of the CBA for the Clarion and Colony manufacturing facilities is April 2026. 22. 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 fiscal years ended March 30, 2024 , April 1, 2023 and April 2, 2022, the total amount of sales to related parties was $ 54.9 million , $ 65.6 million and $ 58.1 million, respectively. As of March 30, 2024, receivables from related parties included $ 8.5 million of accounts receivable and $ 4.6 million of commercial loans outstanding. As of April 1, 2023, receivables from related parties included $ 5.7 million of accounts receivable and $ 4.7 million of commercial loans outstanding. F-36 Table of Contents 23. Acquisitions Fiscal Year 2024 Kentucky Dream Homes Acquisition On November 15, 2023, the Company acquired certain assets and assumed certain liabilities of Kentucky Dream Homes, LLC ("KDH"), a manufactured home retailer with locations in Kentucky and Florida for total consideratio n of $ 23.3 million, which includes $ 5.4 million non-cash commercial loan forgiveness. Th e remaining $ 17.9 million was paid with cash on hand. The final purchase price is subject to customary adjustments. The business is included in the Factory-built housing reportable business segment. The fair value of the assets acquired and liabilities assumed included $ 23.5 million of inventory, $ 4.4 million of goodwill and certain other assets and liabilities. The purchase accounting is subject to final adjustment, primarily for the working capital and amounts allocated to goodwill. We have included the financial results in our Consolidated Financial Statements from the date of acquisition. Pro forma historical results of operations related to this acquisition have not been presented because they are not significant to our Consolidated Financial Statements for the periods presented. Fiscal Year 2023 Solitaire Acquisition On January 3, 2023, we completed the acquisition of Solitaire Inc. and other related entities (collectively "Solitaire Homes") by acquiring 100 % of the outstanding stock of Solitaire Homes. The acquisition-date fair value of the total consideration was $ 110.8 million . In fiscal 2023, we expensed $ 2.4 million in acquisition related transaction costs in Selling, general and administrative expenses in the Consolidated Statements of Comprehensive Income. During the third fiscal quarter of 2024, we finalized the purchase price allocation related to the Solitaire acquisition, which did not have a material effect on the Consolidated Financial Statements. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date (in thousands). January 3, 2023 (as finalized) Cash $ 5,041 Investments 334 Accounts receivable 2,749 Inventories 57,902 Property, plant and equipment 36,006 Other current assets 1,579 Intangible assets (1) 3,400 Total identifiable assets acquired 107,011 Accounts payable and accrued liabilities 11,335 Net identifiable assets acquired 95,676 Goodwill (2) 15,107 Net assets acquired $ 110,783 (1) Includes $ 1.3 million assigned to trade names, which are considered indefinite lived intangible assets and are not subject to amortization, $ 1.9 million assigned to customer-related intangibles, subject to a useful life of 10 years amortized on a straight-line basis, and $ 0.2 million for covenants not to compete from the sellers, amortized on a straight-line basis over the term of 5 years. (2) Attributable to the Factory-built housing segment, all of which will be deductible for income tax purposes. Solitaire Homes contributed Net revenue of $ 28.3 million and a Net loss of $ 0.9 million for the fiscal year ended April 1, 2023. F-37 Table of Contents Pro Forma Impact of Acquisitions (Unaudited) . The following table presents supplemental pro forma information as if the above acquisitions had occurred on April 4, 2021 (in thousands, except per share data): Year Ended April 1, 2023 April 2, 2022 Net revenue $ 2,251,233 $ 1,914,866 Net income attributable to Cavco common stockholders 251,903 208,149 Diluted net income per share 28.23 22.47 Fiscal Year 2022 Craftsman Acquisition On July 4, 2021, we obtained an additional 20 % ownership interest in Craftsman, which gave us a 70 % controlling ownership interest and resulted in consolidation of the Entities. See Redeemable Noncontrolling Interest policy in Note 1. The purchase price on July 4, 2021 for 20 % ownership was $ 2.5 million, valuing the Entities at $ 12.4 million. The remeasurement of the Entities assets and liabilities to fair value resulted in a non-cash gain of $ 3.3 million, recorded in Other income, net in the Consolidated Statements of Comprehensive Income. During fiscal year 2024, we executed amendments to the Membership Interest Purchase Agreement to acquire the entire remaining 30 % for cash on January 1, 2024. Fiscal Year 2022 Commodore Acquisition On September 24, 2021, we purchased certain manufactured housing assets and assumed certain liabilities of Commodore. The acquisition-date fair value of the total consideration was $ 146.0 million . During the second fiscal quarter of 2023, we finalized the purchase price allocation related to the Commodore acquisition, which did not have a material effect on the Consolidated Financial Statements. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date (in thousands). September 24, 2021 (as finalized) Cash $ 619 Accounts receivable 20,930 Commercial loans 30,922 Inventories 31,787 Property, plant and equipment (1) 59,339 Other current assets 534 Intangible assets (2) 12,500 Total identifiable assets acquired 156,631 Accounts payable and accrued liabilities 31,536 Net identifiable assets acquired 125,095 Goodwill (3) 20,892 Net assets acquired $ 145,987 (1) Includes assets acquired under finance leases. (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 F-38 Table of Contents 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. 24. 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 tables provide selected financial data by segment (dollars in thousands): Fiscal Year Ended March 30, 2024 April 1, 2023 April 2, 2022 Net revenue: Factory-built housing $ 1,716,607 $ 2,069,450 $ 1,556,283 Financial services 78,185 73,263 70,875 $ 1,794,792 $ 2,142,713 $ 1,627,158 Net revenue for financial services consists of: Finance $ 18,881 $ 21,952 $ 23,004 Insurance 59,304 51,311 47,871 $ 78,185 $ 73,263 $ 70,875 Income before income taxes: Factory-built housing $ 192,815 $ 296,415 $ 197,282 Financial services 6,365 10,348 14,707 $ 199,180 $ 306,763 $ 211,989 Depreciation: Factory-built housing $ 16,754 $ 14,651 $ 9,451 Financial services 202 182 182 $ 16,956 $ 14,833 $ 9,633 Amortization: Factory-built housing $ 1,544 $ 2,038 $ 1,270 Financial services 25 32 114 $ 1,569 $ 2,070 $ 1,384 Income tax expense: Factory-built housing $ 39,749 $ 63,433 $ 10,853 Financial services 1,526 2,489 3,394 $ 41,275 $ 65,922 $ 14,247 Capital expenditures: Factory-built housing $ 17,189 $ 44,085 $ 18,574 Financial services 232 21 79 $ 17,421 $ 44,106 $ 18,653 F-39 Table of Contents March 30, 2024 April 1, 2023 Total assets: Factory-built housing $ 1,141,237 $ 1,107,555 Financial services 212,923 200,420 $ 1,354,160 $ 1,307,975 Fiscal Year Ended March 30, 2024 April 1, 2023 April 2, 2022 Gross margin %: Consolidated 23.8 % 25.9 % 25.1 % Factory-built housing 23.2 % 25.3 % 23.9 % Financial services 35.8 % 42.9 % 51.5 % F-40