What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-01-31 compared with 2024-11-01 · 53 added, 56 removed, 168 unchanged (39% of the section changed)

37 unchanged sentences

("CountryPlace"), is an approved Federal National Mortgage Association and Federal Home Loan Mortgage Corporation seller/servicer, and a Government National Mortgage Association ("GNMA") mortgage-backed securities issuer that offers conforming mortgages, non-conforming mortgages and home-only loans to purchasers of factory-built homes.

Our insurance subsidiary, Standard Casualty, provides property and casualty insurance primarily to owners of manufactured homes.

Our insurance subsidiary, Standard Casualty Company, provides property and casualty insurance primarily to owners of manufactured homes.

We operate a total of 31 homebuilding production lines with domestic locations in Millersburg and Woodburn, Oregon;

15 unchanged sentences

and two international lines in Ojinaga, Mexico.

We distribute our homes through a large network of independent distribution points in 48 states and Canada and 79 Company-owned U.S.

We distribute our homes through a large network of independent distribution points and 79 Company-owned U.S.

retail stores, of which 47 are located in Texas.

Company and Industry Outlook

According to data reported by the Manufactured Housing Institute, industry home shipments for the calendar year through August 2024 were 68,550, an increase of 16.8% compared to 58,698 shipments in the same calendar period last year.

Higher interest rates and continued inflationary pressures have tempered industry demand.

However, the manufactured h ousing industry offers solutions to the housing crisis with lower average price per square foot than a site-built home and the comparatively lower cost associated with manufactured home ownership, which remains competitive with rental housing.

According to data reported by the Manufactured Housing Institute, industry home shipments for the calendar year through November 2024 were 96,240, an increase of 16.3% compared to 82,784 shipments in the same calendar period last year.

The manufactured h ousing industry offers solutions to the housing crisis with lower average price per square foot than a site-built home and the comparatively lower cost associated with manufactured home ownership, which remains competitive with rental housing.

The two largest manufactured housing consumer demographics, young adults and those who are age 55 and older, are both growing.

17 unchanged sentences

Key housing building materials include wood, wood products, steel, gypsum wallboard, windows, doors fiberglass insulation, carpet, vinyl, fasteners, plumbing materials, aluminum, appliances and electrical items .

Fluctuations in the cost of materials and labor may affect gross margins from home sales to the extent that costs cannot be efficiently matched to the home sal es price.

Fluctuations in the cost of materials and labor may affect gross margins from home sales to the extent that an increase in costs cannot be efficiently matched to the home sal es price.

Pricing and availability of certain raw materials have been volatile due to a number of factors in the current environment.

3 unchanged sentences

These shortages may also result in extended order backlogs, delays in the delivery of homes and reduced gross margins from home sales.

Our backlog at September 28, 2024 was $276 million compared to $232 million at June 29, 2024, an increase of $44 million and up $106 million compared to $170 million at September 30, 2023.

Our backlog at December 28, 2024 was $224 million compared to $276 million at September 28, 2024, a decrease of $52 million, and up $64 million compared to $160 million at December 30, 2023.

While it is difficult to predict the future of housing demand, employee availability, supply chain and Company performance and operations, maintaining an appropriately sized and well-trained workforce is key to meeting demand.

3 unchanged sentences

Three Months Ended

($ in thousands, except revenue per home sold) September 28,

2024 September 30,

($ in thousands, except revenue per home sold) December 28,

2024 December 30,

Factory-built housing $ 500,860 $ 426,939 $ 73,921 17.3 %

6 unchanged sentences

Net factory-built housing revenue per home sold $ 99,004 $ 102,630 $ (3,626) (3.5) %

Six Months Ended

($ in thousands, except revenue per home sold) September 28,

2024 September 30,

Nine Months Ended

($ in thousands, except revenue per home sold) December 28,

2024 December 30,

Factory-built housing $ 1,445,251 $ 1,318,114 $ 127,137 9.6 %

6 unchanged sentences

Net factory-built housing revenue per home sold $ 98,363 $ 101,471 $ (3,108) (3.1) %

Factory-built housing Net revenue increased for the three and six months ended September 28, 2024 due to higher home sales volume, partially offset by a decrease in revenue per home sold.

The decrease in revenue per home sold was attributed to a lower proportion of homes sold through our Company-owned stores and, to a lesser extent, product pricing decreases.

Factory-built housing Net revenue increased for the three and nine months ended December 28, 2024 due to higher home sales volume, partially offset by a decrease in Net revenue per home sold primarily caused by a lower proportion of homes sold through our Company-owned stores.

Net factory-built housing revenue per home sold is a volatile metric dependent upon several factors.

2 unchanged sentences

Retail home prices include these items and retail markup, as well as items that are largely subject to home buyer discretion, including, but not limited to, installation, utility connections, site improvements, landscaping and additional services.

Our h omes are constructed in one or more floor sections ("modules") which are then installed on the customer's site.

Our homes are constructed in one or more floor sections ("modules") which are then installed on the customer's site.

Changes in the number of modules per home, the selection of different home types/models and optional home upgrades create changes in product mix, also causing fluctuations in this metric.

For the three and six months ended September 28, 2024, Financial services Net revenue increased primarily due to higher insurance premiums.

For the three and nine months ended December 28, 2024, Financial services Net revenue increased primarily due to higher insurance premiums.

Three Months Ended

($ in thousands) September 28,

2024 September 30,

($ in thousands) December 28,

2024 December 30,

Factory-built housing $ 118,193 $ 95,756 $ 22,437 23.4 %

5 unchanged sentences

Financial services 55.5 % 36.8 % N/A 18.7 %

Six Months Ended

($ in thousands) September 28,

2024 September 30,

Nine Months Ended

($ in thousands) December 28,

2024 December 30,

Factory-built housing $ 333,223 $ 309,631 $ 23,592 7.6 %

5 unchanged sentences

Financial services 26.3 % 32.3 % N/A (6.0) %

Factory-built housing Gross profit as a percentage of Net revenue for the three and six months ended September 28, 2024 decreased primarily due to lower average selling price, partially offset by lower input costs per unit.

Factory-built housing Gross profit housing in dollars for the three and six months ended September 28, 2024 increased due to higher home sales volume, partially offset by lower average selling price.

Financial services Gross profit in dollars and as a percentage of Net revenue for the three and six months ended September 28, 2024 was negatively impacted by high insurance claims from Hurricane Beryl in July 2024 and multiple weather events in Texas, as well as the wildfires in New Mexico in the first quarter of this fiscal year.

Factory-built housing Gross profit as a percentage of Net revenue for the three months increased due to lower input costs per unit and efficiencies gained on increased production, partially offset by lower average selling price.

Gross profit housing in dollars for the nine months decreased due to lower average selling price, partially offset by lower input costs per unit.

Financial services Gross profit in dollars and as a percentage of Financial services Net revenue for the three months increased due to higher insurance premiums and lower claim losses.

For the nine months, Gross profit in dollars and as a percentage of Net revenue decreased due to higher expenses from higher storm and fire activity, partially offset by higher insurance premiums.

Selling, General and Administrative Expenses

Three Months Ended

($ in thousands) September 28,

2024 September 30,

($ in thousands) December 28,

2024 December 30,

Factory-built housing $ 60,409 $ 57,854 $ 2,555 4.4 %

2 unchanged sentences

Selling, general and administrative expenses as % of Net revenue 12.6 % 14.2 % N/A (1.6) %

Six Months Ended

($ in thousands) September 28,

2024 September 30,

Nine Months Ended

($ in thousands) December 28,

2024 December 30,

Factory-built housing $ 181,569 $ 170,330 $ 11,239 6.6 %

2 unchanged sentences

Selling, general and administrative expenses as % of Net revenue 13.1 % 13.6 % N/A (0.5) %

Selling, general and administrative expenses increased for the three and six months ended September 28, 2024 as a result of increases in variable compensation driven by higher incentive compensation in the second quarter and as a result of increases in compensation related to acquired retail locations for both periods.

Factory-built housing Selling, general and administrative expenses increased for the three and nine months ended December 28, 2024 as a result of increases in variable compensation driven by higher incentive compensation in the third quarter and as a result of increases in compensation related to acquired retail locations for both periods.

Financial services Selling, general and administrative expenses for the three months increased primarily due to increases in compensation year over year.

For the nine months ended it was essentially flat.

Other Components of Net Income

Three Months Ended

($ in thousands) September 28,

2024 September 30,

($ in thousands) December 28,

2024 December 30,

Interest income $ 5,353 $ 5,234 $ 119 2.3 %

Interest expense (155) (842) (687) (81.6) %

Other income, net 258 655 397 (60.6) %

Other income (expense), net 168 (224) 392 175.0 %

Income tax expense (12,874) (7,920) 4,954 62.6 %

Effective tax rate 18.6 % 18.0 % N/A 0.6 %

Six Months Ended

($ in thousands) September 28,

2024 September 30,

Nine Months Ended

($ in thousands) December 28,

2024 December 30,

Interest income $ 16,556 $ 15,664 $ 892 5.7 %

5 unchanged sentences

Interest expense consists primarily of interest related to finance leases.

Other income, net primarily consists of realized and unrealized gains and losses on corporate investments and gains and losses from the sale of property, plant and equipment.

Income tax expense increased for the three months ended September 28, 2024 compared to the prior year period primarily due to higher profit before income taxes, partially offset by a lower effective tax rate due to an increase in energy star tax credits.

Income tax expense for the six months ended September 28, 2024 compared to the prior year period decreased due to lower profit and a lower effective tax rate due to an increase in energy star tax credits.

Other income (expense), net primarily consists of realized and unrealized gains and losses on corporate investments and gains and losses from the sale of property, plant and equipment.

Income tax expense increased for both periods ended compared to the prior year periods primarily due to higher profit before income taxes.

Liquidity and Capital Resources

We believe that cash and cash equivalents at September 28, 2024, together with cash flow from operations, will be sufficient to fund our operations, cover our obligations and provide for growth for the next 12 months and into the foreseeable future.

We believe that cash and cash equivalents at December 28, 2024, together with cash flow from operations, will be sufficient to fund our operations, cover our obligations and provide for growth for the next 12 months and into the foreseeable future.

We maintain cash in U.S.

2 unchanged sentences

Such transactions may require the use of cash and have other impacts on our liquidity and capital resources.

We believe we have sufficient liquid resources including our $50 million Revolving Credit Facility which may be increased from time to time through an additional Incremental Term Facility up to an aggregate amount of $100 million and no amounts are outstanding.

We believe we have sufficient liquid resources including our $75 million Revolving Credit Facility, which may be increased from time to time through additional term facilities up to an aggregate amount of $75 million, and no amounts are outstanding.

Depending on our operating results and strategic opportunities, we may choose to seek additional or alternative sources of financing in the future.

5 unchanged sentences

We believe that stockholders' equity at the insurance subsidiary remains sufficient and do not believe that the ability to pay ordinary dividends to Cavco at anticipated levels will be restricted per state regulations.

The following is a summary of the Company's cash flows for the six months ended September 28, 2024 and September 30, 2023, respectively:

Six Months Ended

(in thousands) September 28,

2024 September 30,

The following is a summary of the Company's cash flows for the nine months ended December 28, 2024 and December 30, 2023, respectively:

Nine Months Ended

(in thousands) December 28,

2024 December 30,

2023 $ Change

1 unchanged sentence

Net cash provided by operating activities 139,851 206,104 (66,253)

Net cash used in by investing activities (11,029) (6,421) (4,608)

Net cash used in investing activities (13,976) (26,543) 12,567

Net cash used in financing activities (116,002) (96,443) (19,559)

Cash, cash equivalents and restricted cash at end of the period $ 378,626 $ 366,608 $ 12,018

Net cash provided by operating activities decreased primarily from increases in working capital, primarily $20.5 million in Inventory and $17.4 million from Accounts receivable, and the spread between Consumer loans originated versus sold and Commercial loans originated versus principal payments received on commercial loans.

This was partially offset by changes in Accounts payable and accrued expenses due primarily to increased customer deposits and volume rebates due to customers.

Consumer loan originations decreased $16.3 million to $39.9 million for the six months ended September 28, 2024 from $56.2 million for the six months ended September 30, 2023, and proceeds from sales of consumer loans decreased $34.2 million to $30.9 million for the six months ended September 28, 2024 from $65.1 million for the six months ended September 30, 2023.

Commercial loan originations increased $2.9 million to $54.7 million for the six months ended September 28, 2024 from $51.8 million for the six months ended September 30, 2023.

Net cash provided by operating activities decreased primarily from increases in working capital, primarily from increases in Inventory and Accounts receivable.

This was partially offset by higher Net income and changes in Accounts payable, accrued expenses due primarily to increased customer deposits and volume rebates due to customers.

Consumer loan originations decreased $20.1 million to $54.2 million for the nine months ended December 28, 2024 from $74.3 million for the nine months ended December 30, 2023, and proceeds from sales of consumer loans decreased $77.3 million to $4.4 million for the nine months ended December 28, 2024 from $81.8 million for the nine months ended December 30, 2023.

Commercial loan originations increased $4.0 million to $87.5 million for the nine months ended December 28, 2024 from $83.5 million for the nine months ended December 30, 2023.

Proceeds from the collection on commercial loans provided $85.0 million this year, compared to $87.6 million in the prior year, a net decrease of $2.6 million.

Net cash for investing activities consists of buying and selling debt and marketable equity securities in our Financial Services segment;

purchases of property, plant and equipment;

and funding strategic growth acquisitions in our Factory-built Housing segment.

The change in cash used in the current period is primarily due to the prior year period including proceeds from the sale of property, plant and equipment that did not repeat in the current year.

The change in Net cash used in financing activities in the six months ended September 28, 2024 was primarily due to the repurchase of the more shares of common stock and at a higher average daily stock price.

The change in Net cash used in investing activities is primarily due to the prior year period including payments for acquisitions that did not repeat in the current year.

The change in Net cash used in financing activities was primarily due to the repurchase of more shares of common stock and at a higher average daily stock price.

Obligations and Commitments.

1 unchanged sentence

Critical Accounting Estimates

There have been no significant changes to our critical accounting estimates during the six months ended September 28, 2024, as compared to those disclosed in Part II, Item 7 of the Form 10-K, under the heading "Critical Accounting Estimates," which provides a discussion of the critical accounting estimates that management believes are critical to the Company's operating results or may affect significant judgments and estimates used in the preparation of the Company's Consolidated Financial Statements.

There have been no significant changes to our critical accounting estimates during the nine months ended December 28, 2024, as compared to those disclosed in Part II, Item 7 of the Form 10-K, under the heading "Critical Accounting Estimates," which provides a discussion of the critical accounting estimates that management believes are critical to the Company's operating results or may affect significant judgments and estimates used in the preparation of the Company's Consolidated Financial Statements.

Quantitative and Qualitative Disclosures About Market Risk

1 unchanged sentence

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis