CAVCO INDUSTRIES, INC. 10-Q

Item 1. Financial Statements CAVCO INDUSTRIES, INC. CONSOLIDATED BALANCE SHEETS (Dollars in thousands, except per share amounts) September 28, 2024 March 30, 2024 ASSETS (Unaudited) Current assets Cash and cash equivalents $ 364,113 $ 352,687 Restricted cash, current 21,519 15,481 Accounts receivable, net 94,296 77,123 Short-term investments 24,574 18,270 Current portion of consumer loans receivable, net 30,899 20,713 Current portion of commercial loans receivable, net 36,887 40,787 Current portion of commercial loans receivable from affiliates, net 2,894 2,529 Inventories 244,025 241,339 Prepaid expenses and other current assets 82,758 82,870 Total current assets 901,965 851,799 Restricted cash 585 585 Investments 12,845 17,316 Consumer loans receivable, net 20,770 23,354 Commercial loans receivable, net 47,192 45,660 Commercial loans receivable from affiliates, net 3,933 2,065 Property, plant and equipment, net 225,121 224,199 Goodwill 121,969 121,934 Other intangibles, net 27,445 28,221 Operating lease right-of-use assets 36,378 39,027 Total assets $ 1,398,203 $ 1,354,160 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $ 39,252 $ 33,531 Accrued expenses and other current liabilities 272,228 239,736 Total current liabilities 311,480 273,267 Operating lease liabilities 32,485 35,148 Other liabilities 7,529 7,759 Deferred income taxes 4,732 4,575 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 9,417,332 and 9,389,953 shares, respectively; Outstanding 8,158,996 and 8,320,718 shares, respectively 94 94 Treasury stock, at cost; 1,258,336 and 1,069,235 shares, respectively ( 348,406 ) ( 274,693 ) Additional paid-in capital 284,995 281,216 Retained earnings 1,105,371 1,027,127 Accumulated other comprehensive loss ( 77 ) ( 333 ) Total stockholders' equity 1,041,977 1,033,411 Total liabilities and stockholders' equity $ 1,398,203 $ 1,354,160 See accompanying Notes to Consolidated Financial Statements 1 Table of Contents CAVCO INDUSTRIES, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Dollars in thousands, except per share amounts) (Unaudited) Three Months Ended Six Months Ended September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023 Net revenue $ 507,461 $ 452,030 $ 985,060 $ 927,905 Cost of sales 391,339 345,073 765,536 703,069 Gross profit 116,122 106,957 219,524 224,836 Selling, general and administrative expenses 66,997 61,506 131,848 123,186 Income from operations 49,125 45,451 87,676 101,650 Interest income 5,692 5,812 11,203 10,430 Interest expense ( 125 ) ( 257 ) ( 215 ) ( 523 ) Other income, net 258 655 147 781 Income before income taxes 54,950 51,661 98,811 112,338 Income tax expense ( 11,135 ) ( 10,088 ) ( 20,567 ) ( 24,354 ) Net income 43,815 41,573 78,244 87,984 Less: net income attributable to redeemable noncontrolling interest — 34 — 88 Net income attributable to Cavco common stockholders $ 43,815 $ 41,539 $ 78,244 $ 87,896 Comprehensive income Net income $ 43,815 $ 41,573 $ 78,244 $ 87,984 Reclassification adjustment for securities sold 262 3 271 6 Applicable income tax (expense) ( 55 ) — ( 57 ) ( 1 ) Net change in unrealized position of investments held ( 11 ) 65 54 9 Applicable income tax (expense) 3 ( 14 ) ( 11 ) ( 2 ) Comprehensive income 44,014 41,627 78,501 87,996 Less: comprehensive income attributable to redeemable noncontrolling interest — 34 — 88 Comprehensive income attributable to Cavco common stockholders $ 44,014 $ 41,593 $ 78,501 $ 87,908 Net income per share attributable to Cavco common stockholders Basic $ 5.33 $ 4.80 $ 9.48 $ 10.15 Diluted $ 5.28 $ 4.76 $ 9.38 $ 10.05 Weighted average shares outstanding Basic 8,226,298 8,656,537 8,256,664 8,663,430 Diluted 8,305,326 8,731,419 8,337,671 8,742,734 See accompanying Notes to Consolidated Financial Statements 2 Table of Contents CAVCO INDUSTRIES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) (Unaudited) Six Months Ended September 28, 2024 September 30, 2023 OPERATING ACTIVITIES Net income $ 78,244 $ 87,984 Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization 9,520 9,234 Provision for credit losses ( 260 ) ( 204 ) Deferred income taxes 88 ( 1,845 ) Stock-based compensation expense 4,907 2,989 Non-cash interest income, net ( 527 ) ( 1,413 ) Loss on sale or retirement of property, plant and equipment, net 26 40 Gain on investments and sale of loans, net ( 1,694 ) ( 4,278 ) Changes in operating assets and liabilities, net of acquisitions Accounts receivable ( 17,261 ) 144 Consumer loans receivable originated ( 39,914 ) ( 56,158 ) Proceeds from sales of consumer loans receivable 30,899 65,113 Principal payments received on consumer loans receivable 3,146 3,567 Inventories ( 2,686 ) 19,683 Prepaid expenses and other current assets 1,017 17,823 Commercial loans receivable originated ( 54,724 ) ( 51,768 ) Principal payments received on commercial loans receivable 55,147 59,378 Accounts payable, accrued expenses and other liabilities 36,146 9,911 Net cash provided by operating activities 102,074 160,200 INVESTING ACTIVITIES Purchases of property, plant and equipment ( 9,854 ) ( 8,470 ) Payments for acquisitions, net — ( 1,298 ) Proceeds from sale of property, plant and equipment 127 4,490 Purchases of investments ( 12,433 ) ( 6,499 ) Proceeds from sale of investments 11,131 5,356 Net cash used in by investing activities ( 11,029 ) ( 6,421 ) FINANCING ACTIVITIES Payments for taxes on stock option exercises and releases of equity awards ( 2,921 ) ( 1,643 ) Proceeds from exercise of stock options 1,793 909 Payments on finance leases and other secured financings ( 177 ) ( 295 ) Payments for common stock repurchases ( 72,276 ) ( 40,911 ) Distributions to noncontrolling interest — ( 300 ) Net cash used in financing activities ( 73,581 ) ( 42,240 ) Net increase in cash, cash equivalents and restricted cash 17,464 111,539 Cash, cash equivalents and restricted cash at beginning of the fiscal year 368,753 283,490 Cash, cash equivalents and restricted cash at end of the period $ 386,217 $ 395,029 Supplemental disclosures of cash flow information Cash paid for income taxes $ 18,825 $ 18,641 Cash paid for interest $ 30 $ 368 Supplemental disclosures of noncash activity Change in GNMA loans eligible for repurchase $ 496 $ ( 3,250 ) See accompanying Notes to Consolidated Financial Statements 3 Table of Contents CAVCO INDUSTRIES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. Basis of Presentation The accompanying unaudited Consolidated Financial Statements of Cavco Industries, Inc. and its subsidiaries (collectively, "we," "us," "our," the "Company" or "Cavco") have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC") for Quarterly Reports on Form 10-Q and Article 10 of SEC Regulation S-X. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles ("GAAP") have been condensed or omitted pursuant to such rules and regulations. In addition, references throughout to numbered "Notes" refer to these Notes to Consolidated Financial Statements (Unaudited), unless otherwise stated. In the opinion of management, these financial statements include all adjustments, including normal recurring adjustments, which are necessary to fairly state the interim results for the periods presented. We have evaluated subsequent events after the balance sheet date through the date of the filing of this report with the SEC, and there were no disclosable subsequent events. These Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and the Notes to the Consolidated Financial Statements included in our 2024 Annual Report on Form 10-K for the year ended March 30, 2024, filed with the SEC ("Form 10-K"). The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and accompanying Notes. Due to uncertainties, actual results could differ from the estimates and assumptions used in preparation of the Consolidated Financial Statements. The Consolidated Statements of Comprehensive Income and Consolidated Statements of Cash Flows for the interim periods are not necessarily indicative of the results or cash flows for the full year. The Company operates on a 52-53 week fiscal year ending on the Saturday nearest to March 31 st of each year. Each fiscal quarter consists of 13 weeks, with an occasional fourth quarter extending to 14 weeks, if necessary, for the fiscal year to end on the Saturday nearest to March 31 st . The current fiscal year will end on March 29, 2025 and will include 52 weeks. For a description of significant accounting policies we used in the preparation of our Consolidated Financial Statements, please refer to Note 1 of the Notes to Consolidated Financial Statements included in the Form 10-K. 2. Recent Accounting Pronouncements The Company considers the applicability and impact of all Accounting Standards Updates ("ASUs") issued by the Financial Accounting Standards Board ("FASB"). ASUs not listed below were assessed and determined to be either not applicable or are expected to have minimal impact on the Company's Consolidated Financial Statements. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Taxes Disclosures, which requires greater disaggregation of income tax disclosures. The new standard requires additional information to be disclosed with respect to the income tax rate reconciliation and income taxes paid disaggregated by jurisdiction. This ASU should be applied prospectively for fiscal years beginning after December 15, 2024, with retrospective application permitted. The Company is currently evaluating the impacts of this guidance on the Company’s Consolidated Financial Statements. In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires companies to enhance the disclosures about segment expenses. The new standard requires the disclosure of the Company’s Chief Operating Decision Maker ("CODM"), expanded incremental line-item disclosures of significant segment expenses used by the CODM for decision-making, and the inclusion of previous annual only segment disclosure requirements on a quarterly basis. This ASU should be applied retrospectively for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the impacts of this guidance on the Company’s Consolidated Financial Statements. 4 Table of Contents 3. Revenue from Contracts with Customers The following table summarizes Net revenue disaggregated by reportable segment and source (in thousands): Three Months Ended Six Months Ended September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023 Factory-built housing Home sales $ 469,676 $ 410,040 $ 906,105 $ 849,784 Delivery, setup and other revenues 16,667 24,026 38,286 41,391 486,343 434,066 944,391 891,175 Financial services Insurance agency commissions received from third-party insurance companies 1,268 1,017 2,674 1,916 All other sources 19,850 16,947 37,995 34,814 21,118 17,964 40,669 36,730 $ 507,461 $ 452,030 $ 985,060 $ 927,905 4. Investments Investments consisted of the following (in thousands): September 28, 2024 March 30, 2024 Available-for-sale debt securities $ 20,482 $ 18,669 Marketable equity securities 11,827 11,961 Non-marketable equity investments 5,110 4,956 37,419 35,586 Less short-term investments ( 24,574 ) ( 18,270 ) $ 12,845 $ 17,316 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): September 28, 2024 March 30, 2024 Amortized Cost Fair Value Amortized Cost Fair Value Residential mortgage-backed securities $ 8,248 $ 8,246 $ 2,933 $ 2,865 State and political subdivision debt securities 3,575 3,558 5,041 4,930 Corporate debt securities 8,757 8,678 11,117 10,874 $ 20,580 $ 20,482 $ 19,091 $ 18,669 5 Table of Contents The amortized cost and fair value of our investments in available-for-sale debt securities, by contractual maturity, are shown in the table below (in thousands). Expected maturities may differ from contractual maturities as borrowers at times have the right to call or prepay obligations, with or without penalties. September 28, 2024 Amortized Cost Fair Value Due in less than one year $ 7,534 $ 7,475 Due after one year through five years 4,573 4,536 Due after five years through ten years 225 225 Mortgage-backed securities 8,248 8,246 $ 20,580 $ 20,482 Net investment gains and losses on marketable equity securities were as follows (in thousands): Three Months Ended Six Months Ended September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023 Marketable equity securities Net gain (loss) recognized during the period $ 514 $ ( 185 ) $ 60 $ 275 Less: Net loss (gain) recognized on securities sold during the period 88 ( 110 ) ( 464 ) ( 130 ) Unrealized gain (loss) recognized during the period on securities still held $ 602 $ ( 295 ) $ ( 404 ) $ 145 5. Inventories Inventories consisted of the following (in thousands): September 28, 2024 March 30, 2024 Raw materials $ 76,120 $ 78,241 Work in process 31,247 27,977 Finished goods 136,658 135,121 $ 244,025 $ 241,339 6 Table of Contents 6. Consumer Loans Receivable The following table summarizes consumer loans receivable (in thousands): September 28, 2024 March 30, 2024 Loans held for investment, previously securitized $ 15,162 $ 16,968 Loans held for investment 12,230 12,826 Loans held for sale 23,708 15,140 Construction advances 2,409 722 53,509 45,656 Deferred financing fees and other, net ( 834 ) ( 523 ) Allowance for loan losses ( 1,006 ) ( 1,066 ) 51,669 44,067 Less current portion ( 30,899 ) ( 20,713 ) $ 20,770 $ 23,354 The consumer loans held for investment had the following characteristics: September 28, 2024 March 30, 2024 Weighted average contractual interest rate 8.1 % 8.1 % Weighted average effective interest rate 7.8 % 10.4 % Weighted average months to maturity 211 196 The following table is a consolidated summary of the delinquency status of the outstanding principal balance of consumer loans receivable (in thousands): September 28, 2024 March 30, 2024 Current $ 52,074 $ 43,810 31 to 60 days 261 1,063 61 to 90 days 119 131 91+ days 1,055 652 $ 53,509 $ 45,656 7 Table of Contents The following table disaggregates the outstanding principal balance of consumer loans receivable by credit quality indicator and fiscal year of origination (in thousands): September 28, 2024 2025 2024 2023 2022 2021 Prior Total Prime- FICO score 680 and greater $ 12,692 $ 9,455 $ 325 $ 94 $ 874 $ 14,477 $ 37,917 Near Prime- FICO score 620-679 2,056 1,557 — — 1,038 9,235 13,886 Sub-Prime- FICO score less than 620 26 — — — 17 718 761 No FICO score 211 444 — — — 290 945 $ 14,985 $ 11,456 $ 325 $ 94 $ 1,929 $ 24,720 $ 53,509 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 As of September 28, 2024, 53 % of the outstanding principal balance of the consumer loans receivable portfolio was concentrated in Texas. 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. Other than Texas and Florida, no sta te had concentrations in excess of 10% of the outstanding principal balance of the consumer loans receivable as of September 28, 2024 or March 30, 2024. 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. Commercial loans receivable, net consisted of the following (in thousands): September 28, 2024 March 30, 2024 Loans receivable $ 91,588 $ 91,938 Allowance for loan losses ( 484 ) ( 781 ) Deferred financing fees, net ( 198 ) ( 116 ) 90,906 91,041 Less current portion of commercial loans receivable (including from affiliates), net ( 39,781 ) ( 43,316 ) $ 51,125 $ 47,725 The commercial loans receivable balance had the following characteristics: September 28, 2024 March 30, 2024 Weighted average contractual interest rate 7.3 % 7.4 % Weighted average months outstanding 10 12 8 Table of Contents Nonperforming status includes loans accounted for on a non-accrual basis and accruing loans with principal payments 90 days or more past due. As of September 28, 2024 and March 30, 2024, there were no commercial loans considered nonperforming. The following table disaggregates the outstanding principal balance of our commercial loans receivable by fiscal year of origination (in thousands): September 28, 2024 2025 2024 2023 2022 2021 Total Performing $ 40,830 $ 34,916 $ 11,789 $ 1,886 $ 2,167 $ 91,588 March 30, 2024 2024 2023 2022 2021 2020 Total Performing $ 57,691 $ 25,066 $ 4,823 $ 2,144 $ 2,214 $ 91,938 As of September 28, 2024 and 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. As of September 28, 2024, we had concentrations of our outstanding principal balance of the commercial loans receivable balance in New York of 18 % and California of 16 %. As of March 30, 2024, 18 % of our outstanding principal balance of the commercial loans receivable balance was in New York. No other state had concentrations in excess of 10% of the outstanding principal balance of the commercial loans receivable as of September 28, 2024 or March 30, 2024. As of September 28, 2024 and March 30, 2024, one independent third-party and its affiliates comprised 12 % and 13 %, respectively, of the net commercial loans receivable principal balance outstanding, all of which are secured . 8. Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consisted of the following (in thousands): September 28, 2024 March 30, 2024 Customer deposits $ 46,712 $ 40,856 Salaries, wages and benefits 43,673 38,125 Unearned insurance premiums 35,490 33,449 Estimated warranties 33,081 31,718 Accrued volume rebates 29,208 21,167 Insurance loss reserves 14,620 10,540 Accrued insurance 14,194 14,124 Other 55,250 49,757 $ 272,228 $ 239,736 9 Table of Contents 9. Warranties Activity in the liability for estimated warranties was as follows (in thousands): Three Months Ended Six Months Ended September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023 Balance at beginning of period $ 31,815 $ 32,401 $ 31,718 $ 31,368 Charged to costs and expenses 13,990 12,206 26,081 25,615 Payments and deductions ( 12,724 ) ( 11,592 ) ( 24,718 ) ( 23,968 ) Balance at end of period $ 33,081 $ 33,015 $ 33,081 $ 33,015 10. Other Liabilities The following table summarizes secured financings and other obligations (in thousands): September 28, 2024 March 30, 2024 Finance lease liabilities $ 6,127 $ 6,166 Other secured financing 1,726 1,916 7,853 8,082 Less current portion included in Accrued expenses and other current liabilities ( 324 ) ( 323 ) $ 7,529 $ 7,759 11. Debt As of September 28, 2024, we are party to a Credit Agreement (the "Credit Agreement") that matures in November 2027 with Bank of America, N.A., providing for a $ 50 million revolving credit facility (the "Revolving Credit Facility") which may be increased up to an aggregate amount of $ 100 million. As of September 28, 2024 and March 30, 2024, there were no borrowings outstanding under the Revolving Credit Facility and we were in compliance with all covenants. 12. Reinsurance and Insurance Loss Reserves Certain of Standard Casualty Company's ("Standard Casualty") premiums and benefits are assumed from and ceded to other insurance companies under various reinsurance agreements. We remain obligated for amounts ceded in the event that the reinsurers do not meet their obligations. 10 Table of Contents The effects of reinsurance on premiums written and earned were as follows (in thousands): Three Months Ended September 28, 2024 September 30, 2023 Written Earned Written Earned Direct premiums $ 9,380 $ 12,177 $ 10,067 $ 9,371 Assumed premiums—nonaffiliated 11,303 10,095 9,505 8,851 Ceded premiums—nonaffiliated ( 8,880 ) ( 8,880 ) ( 6,438 ) ( 6,438 ) $ 11,803 $ 13,392 $ 13,134 $ 11,784 Six Months Ended September 28, 2024 September 30, 2023 Written Earned Written Earned Direct premiums $ 22,883 $ 24,479 $ 20,446 $ 18,047 Assumed premiums—nonaffiliated 23,038 19,599 19,305 17,421 Ceded premiums—nonaffiliated ( 17,065 ) ( 17,065 ) ( 12,565 ) ( 12,565 ) $ 28,856 $ 27,013 $ 27,186 $ 22,903 Typical insurance policies written or assumed have a maximum coverage of $ 0.4 million per claim, of which we cede $ 0.15 million of the risk of loss per reinsurance. Therefore, our risk of loss is limited to $ 0.25 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 million in the aggregate for that occurrence. The following details the activity in the incurred but not reported ("IBNR") reserve for the three and six months ended September 28, 2024 a nd September 30, 2023 (in thousands): Three Months Ended Six Months Ended September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023 Balance at beginning of period $ 18,927 $ 13,001 $ 10,540 $ 10,939 Net incurred losses during the period 14,128 8,586 32,091 19,663 Net claim payments during the period ( 18,435 ) ( 12,433 ) ( 28,011 ) ( 21,448 ) Balance at end of period $ 14,620 $ 9,154 $ 14,620 $ 9,154 13. Commitments and Contingencies Repurchase Contingencies . The maximum amount for which the Company was liable under the terms of repurchase agreements with financial institutions that provide inventory financing to independent distributors of our products approximated $ 126 million and $ 121 million at September 28, 2024 and March 30, 2024, respectively, without reduction for the estimated resale value of the home s. During the three and six months ended September 28, 2024 we did not receive any demand notices. In all cas es, the estimated fair value exceeded the repurchase price so no loss reserve was deemed necessary. Our reserve for repurchase commitments, recorded in Accrued expenses and other current liabilities, was $ 3.1 million at September 28, 2024 and $ 2.9 million at March 30, 2024 . Construction-Period Mortgages. Loan contracts with off-balance sheet commitments are summarized below (in thousands): 11 Table of Contents September 28, 2024 March 30, 2024 Construction loan contract amount $ 7,787 $ 1,960 Cumulative advances ( 2,409 ) ( 722 ) $ 5,378 $ 1,238 Representations and Warranties of Mortgages Sold . The reserve for contingent repurchases and indemnification obliga tions was $ 0.6 million as of both September 28, 2024 and March 30, 2024, included in Accrued expenses and other current liabilities on the Consolidated Balance Sheets. There were no claim requests that resulted in the repurchase of any loans during the six months ended September 28, 2024 or September 30, 2023 . Interest Rate Lock Commitments ("IRLCs") . As of September 28, 2024 and March 30, 2024, we had outstanding IRLCs with a notional amount of $ 14.7 million and $ 39.0 million, respectively. For the three and six months ended September 28, 2024, we recognized insignificant non-cash gains on outstanding IRLCs. For the three and six months ended September 30, 2023, we recognized insignificant non-cash losses on outstanding IRLCs. Forward Sales Commitments . As of September 28, 2024 and March 30, 2024, we had $ 7.1 million and $ 2.8 million in outstanding forward sales commitments for sales of mortgage backed securities and whole loan commitments (collectively, the "Commitments"), respectively. During the three and six months ended September 28, 2024, we recognized insignificant non-cash losses. During the three months ended September 30, 2023, we recognized insignificant non-cash gains. Legal Matters. We are party to certain lawsuits in the ordinary course of business. Based on management's present knowledge of the facts and (in certain cases) advice of outside counsel, management does not believe that loss contingencies arising from pending matters are likely to have a material adverse effect on our consolidated financial position, liquidity or results of operations after taking into account any existing reserves, which reserves are included in Accrued expenses and other current liabilities on the Consolidated Balance Sheets. However, future events or circumstances 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. 12 Table of Contents 14. Stockholders' Equity and Redeemable Noncontrolling Interest The following tables represent changes in stockholders' equity attributable to Cavco's stockholders and redeemable noncontrolling interest during the six months ended September 28, 2024 and September 30, 2023, respectively (dollars in thousands): Equity Attributable to Cavco Stockholders Treasury stock Additional paid-in capital Retained earnings Accumulated other comprehensive (loss) income Total Common Stock Shares Amount Balance, March 30, 2024 9,389,953 $ 94 $ ( 274,693 ) $ 281,216 $ 1,027,127 $ ( 333 ) $ 1,033,411 Net income — — — — 34,429 — 34,429 Other comprehensive income, net — — — — — 58 58 Net issuance of common stock under stock incentive plans 11,104 — — ( 2,348 ) — — ( 2,348 ) Stock-based compensation — — — 2,194 — — 2,194 Common stock repurchases ( 29,204 ) ( 29,204 ) Balance, June 29, 2024 9,401,057 $ 94 $ ( 303,897 ) $ 281,062 $ 1,061,556 $ ( 275 ) $ 1,038,540 Net income — — — — 43,815 — 43,815 Other comprehensive income, net — — — — — 198 198 Net issuance of common stock under stock incentive plans 16,275 — 1,220 — — 1,220 Stock-based compensation — — — 2,713 — — 2,713 Common stock repurchases — — ( 44,509 ) — — — ( 44,509 ) Balance, September 28, 2024 9,417,332 $ 94 $ ( 348,406 ) $ 284,995 $ 1,105,371 $ ( 77 ) $ 1,041,977 13 Table of Contents Equity Attributable to Cavco Stockholders Treasury stock Additional paid-in capital Retained earnings Accumulated other comprehensive (loss) income Total Redeemable noncontrolling interest Common Stock Shares Amount Balance, April 1, 2023 9,337,125 $ 93 $ ( 164,452 ) $ 271,950 $ 869,310 $ ( 615 ) $ 976,286 $ 1,219 Net income — — — — 46,357 — 46,357 54 Other comprehensive loss, net — — — — — ( 42 ) ( 42 ) — Net issuance of common stock under stock incentive plans 10,095 — — ( 1,213 ) — — ( 1,213 ) — Stock-based compensation — — — 1,438 — — 1,438 — Distributions — — — — — — — ( 120 ) Valuation adjustment — — — — — — — ( 33 ) Balance, July 1, 2023 9,347,220 $ 93 $ ( 164,452 ) $ 272,175 $ 915,667 $ ( 657 ) $ 1,022,826 $ 1,120 Net income — — — — 41,539 — 41,539 34 Other comprehensive income, net — — — — — 54 54 — Net issuance of common stock under stock incentive plans 9,201 1 — 478 — — 479 — Stock-based compensation — — — 1,551 — — 1,551 — Common stock repurchases — — ( 47,194 ) — — — ( 47,194 ) — Distributions — — — — — — — ( 180 ) Conversion to mandatorily redeemable noncontrolling interest — — — — — — — ( 974 ) Balance, September 30, 2023 9,356,421 $ 94 $ ( 211,646 ) $ 274,204 $ 957,206 $ ( 603 ) $ 1,019,255 $ — 14 Table of Contents 15. Earnings Per Share The following table sets forth the computation of basic and diluted earnings per share (dollars in thousands, except per share amounts): Three Months Ended Six Months Ended September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023 Net income attributable to Cavco common stockholders $ 43,815 $ 41,539 $ 78,244 $ 87,896 Weighted average shares outstanding Basic 8,226,298 8,656,537 8,256,664 8,663,430 Effect of dilutive securities 79,028 74,882 81,007 79,304 Diluted 8,305,326 8,731,419 8,337,671 8,742,734 Net income per share attributable to Cavco common stockholders Basic $ 5.33 $ 4.80 $ 9.48 $ 10.15 Diluted $ 5.28 $ 4.76 $ 9.38 $ 10.05 Anti-dilutive common stock equivalents excluded 257 335 428 320 16. Fair Value Measurements The book value and estimated fair value of our financial instruments were as follows (in thousands): September 28, 2024 March 30, 2024 Book Value Estimated Fair Value Book Value Estimated Fair Value Available-for-sale debt securities $ 20,482 $ 20,482 $ 18,669 $ 18,669 Marketable equity securities 11,827 11,827 11,961 11,961 Non-marketable equity investments 5,110 5,110 4,956 4,956 Consumer loans receivable 51,669 55,914 44,067 49,105 Commercial loans receivable 90,906 81,030 91,041 80,764 Other secured financing ( 1,726 ) ( 1,721 ) ( 1,916 ) ( 1,841 ) See Note 20, Fair Value Measurements, and the Fair Value of Financial Instruments caption in Note 1, Summary of Significant Accounting Policies, in the Form 10-K for more information on the methodologies we use in determining fair value. Mortgage Servicing . Mortgage Servicing Rights ("MSRs") are recorded at fair value in Prepaid expenses and other current assets on the Consolidated Balance Sheets. September 28, 2024 March 30, 2024 Number of loans serviced with MSRs 3,734 3,842 Weighted average servicing fee (basis points) 34.80 34.79 Capitalized servicing multiple 179.9 % 188.59 % Capitalized servicing rate (basis points) 62.60 65.61 Serviced portfolio with MSRs (in thousands) $ 465,622 $ 482,898 MSRs (in thousands) $ 2,915 $ 3,168 15 Table of Contents 17. Business Segment Information We operate principally in two segments: (1) factory-built housing, which includes wholesale and retail factory-built housing operations, and (2) financial services, which includes manufactured housing consumer finance and insurance. The following table provides selected financial data by segment (in thousands): Three Months Ended Six Months Ended September 28, 2024 September 30, 2023 September 28, 2024 September 30, 2023 Net revenue: Factory-built housing $ 486,343 $ 434,066 $ 944,391 $ 891,175 Financial services 21,118 17,964 40,669 36,730 $ 507,461 $ 452,030 $ 985,060 $ 927,905 Income (loss) before income taxes: Factory-built housing $ 55,905 $ 50,226 $ 105,005 $ 112,051 Financial services ( 955 ) 1,435 ( 6,194 ) 287 $ 54,950 $ 51,661 $ 98,811 $ 112,338 September 28, 2024 March 30, 2024 Total assets: Factory-built housing $ 1,169,496 $ 1,141,237 Financial services 228,707 212,923 $ 1,398,203 $ 1,354,160 16 Table of Contents