CAVCO INDUSTRIES, INC. 10-Q

Item 1. Financial Statements CAVCO INDUSTRIES, INC. CONSOLIDATED BALANCE SHEETS (Dollars in thousands, except per share amounts) December 28, 2024 March 30, 2024 ASSETS (Unaudited) Current assets Cash and cash equivalents $ 362,863 $ 352,687 Restricted cash, current 15,178 15,481 Accounts receivable, net 91,840 77,123 Short-term investments 16,062 18,270 Current portion of consumer loans receivable, net 33,242 20,713 Current portion of commercial loans receivable, net 34,892 40,787 Current portion of commercial loans receivable from affiliates, net 1,358 2,529 Inventories 243,299 241,339 Prepaid expenses and other current assets 79,253 82,870 Total current assets 877,987 851,799 Restricted cash 585 585 Investments 18,287 17,316 Consumer loans receivable, net 20,394 23,354 Commercial loans receivable, net 51,305 45,660 Commercial loans receivable from affiliates, net 6,798 2,065 Property, plant and equipment, net 226,126 224,199 Goodwill 121,969 121,934 Other intangibles, net 27,068 28,221 Operating lease right-of-use assets 35,248 39,027 Total assets $ 1,385,767 $ 1,354,160 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $ 26,088 $ 33,531 Accrued expenses and other current liabilities 259,134 239,736 Total current liabilities 285,222 273,267 Operating lease liabilities 31,472 35,148 Other liabilities 7,206 7,759 Deferred income taxes 4,642 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 9,422,969 and 9,389,953 shares, respectively; Outstanding 8,066,549 and 8,320,718 shares, respectively 94 94 Treasury stock, at cost; 1,356,420 and 1,069,235 shares, respectively ( 391,128 ) ( 274,693 ) Additional paid-in capital 286,573 281,216 Retained earnings 1,161,833 1,027,127 Accumulated other comprehensive loss ( 147 ) ( 333 ) Total stockholders' equity 1,057,225 1,033,411 Total liabilities and stockholders' equity $ 1,385,767 $ 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 Nine Months Ended December 28, 2024 December 30, 2023 December 28, 2024 December 30, 2023 Net revenue $ 522,040 $ 446,769 $ 1,507,100 $ 1,374,674 Cost of sales 392,090 343,718 1,157,626 1,046,787 Gross profit 129,950 103,051 349,474 327,887 Selling, general and administrative expenses 65,980 63,312 197,828 186,498 Income from operations 63,970 39,739 151,646 141,389 Interest income 5,353 5,234 16,556 15,664 Interest expense ( 155 ) ( 842 ) ( 370 ) ( 1,365 ) Other income (expense), net 168 ( 224 ) 315 557 Income before income taxes 69,336 43,907 168,147 156,245 Income tax expense ( 12,874 ) ( 7,920 ) ( 33,441 ) ( 32,274 ) Net income 56,462 35,987 134,706 123,971 Less: net income attributable to redeemable noncontrolling interest — — — 88 Net income attributable to Cavco common stockholders $ 56,462 $ 35,987 $ 134,706 $ 123,883 Comprehensive income Net income $ 56,462 $ 35,987 $ 134,706 $ 123,971 Reclassification adjustment for securities sold ( 97 ) 293 174 299 Applicable income tax benefit (expense) 20 ( 62 ) ( 37 ) ( 63 ) Net change in unrealized position of investments held 8 13 62 22 Applicable income tax benefit (expense) ( 2 ) ( 3 ) ( 13 ) ( 5 ) Comprehensive income 56,391 36,228 134,892 124,224 Less: comprehensive income attributable to redeemable noncontrolling interest — — — 88 Comprehensive income attributable to Cavco common stockholders $ 56,391 $ 36,228 $ 134,892 $ 124,136 Net income per share attributable to Cavco common stockholders Basic $ 6.97 $ 4.31 $ 16.42 $ 14.47 Diluted $ 6.90 $ 4.27 $ 16.25 $ 14.34 Weighted average shares outstanding Basic 8,096,538 8,358,389 8,203,448 8,561,209 Diluted 8,186,814 8,432,471 8,291,647 8,640,288 See accompanying Notes to Consolidated Financial Statements 2 Table of Contents CAVCO INDUSTRIES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) (Unaudited) Nine Months Ended December 28, 2024 December 30, 2023 OPERATING ACTIVITIES Net income $ 134,706 $ 123,971 Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization 14,304 13,854 Provision for credit losses ( 874 ) ( 121 ) Deferred income taxes 17 ( 1,861 ) Stock-based compensation expense 6,653 4,698 Non-cash interest income, net ( 787 ) ( 1,230 ) (Gain) loss on sale or retirement of property, plant and equipment, net ( 19 ) 186 Gain on investments and sale of loans, net ( 1,901 ) ( 5,958 ) Changes in operating assets and liabilities, net of acquisitions Accounts receivable ( 14,762 ) 18,161 Consumer loans receivable originated ( 54,155 ) ( 74,306 ) Proceeds from sales of consumer loans receivable 4,408 81,752 Principal payments received on consumer loans receivable 42,618 5,480 Inventories ( 1,960 ) 51,182 Prepaid expenses and other current assets 4,997 9,909 Commercial loans receivable originated ( 87,543 ) ( 83,509 ) Principal payments received on commercial loans receivable 85,008 87,591 Accounts payable, accrued expenses and other liabilities 9,141 ( 23,695 ) Net cash provided by operating activities 139,851 206,104 INVESTING ACTIVITIES Purchases of property, plant and equipment ( 15,288 ) ( 13,237 ) Payments for acquisitions, net — ( 19,702 ) Proceeds from sale of property, plant and equipment 194 4,514 Purchases of investments ( 21,588 ) ( 7,408 ) Proceeds from sale of investments 22,706 9,290 Net cash used in investing activities ( 13,976 ) ( 26,543 ) FINANCING ACTIVITIES Payments for taxes on stock option exercises and releases of equity awards ( 3,425 ) ( 1,898 ) Proceeds from exercise of stock options 2,130 3,098 Payments on finance leases and other secured financings ( 261 ) ( 442 ) Payments for common stock repurchases ( 114,446 ) ( 96,781 ) Distributions to noncontrolling interest — ( 420 ) Net cash used in financing activities ( 116,002 ) ( 96,443 ) Net increase in cash, cash equivalents and restricted cash 9,873 83,118 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 $ 378,626 $ 366,608 Supplemental disclosures of cash flow information Cash paid for income taxes $ 34,173 $ 28,776 Cash paid for interest $ 30 $ 612 Supplemental disclosures of noncash activity Change in GNMA loans eligible for repurchase $ 730 $ ( 3,812 ) 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 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 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 identification and 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 In November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses ("ASU 2024-03"), and in January 2025, the FASB issued ASU No. 2025-01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date ("ASU 2025-01"). ASU 2024-03 requires additional disclosure of the nature of expenses included in the income statement as well as disclosures about specific types of expenses included in the expense captions presented in the income statement. ASU 2024-03, as clarified by ASU 2025-01, is effective for annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Both early adoption and retrospective application are permitted. The Company is currently evaluating the impact that the adoption of these standards will have on its Consolidated Financial Statements. 3. Revenue from Contracts with Customers The following table summarizes Net revenue disaggregated by reportable segment and source (in thousands): Three Months Ended Nine Months Ended December 28, 2024 December 30, 2023 December 28, 2024 December 30, 2023 Factory-built housing Home sales $ 471,998 $ 400,633 $ 1,378,103 $ 1,250,417 Delivery, setup and other revenues 28,862 26,306 67,148 67,697 500,860 426,939 1,445,251 1,318,114 Financial services Insurance agency commissions received from third-party insurance companies 1,246 1,229 3,920 3,145 All other sources 19,934 18,601 57,929 53,415 21,180 19,830 61,849 56,560 $ 522,040 $ 446,769 $ 1,507,100 $ 1,374,674 4. Investments Investments consisted of the following (in thousands): December 28, 2024 March 30, 2024 Available-for-sale debt securities $ 21,783 $ 18,669 Marketable equity securities 7,434 11,961 Non-marketable equity investments 5,132 4,956 34,349 35,586 Less short-term investments ( 16,062 ) ( 18,270 ) $ 18,287 $ 17,316 5 Table of Contents 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): December 28, 2024 March 30, 2024 Amortized Cost Fair Value Amortized Cost Fair Value Residential mortgage-backed securities $ 4,146 $ 4,093 $ 2,933 $ 2,865 State and political subdivision debt securities 6,565 6,515 5,041 4,930 Corporate debt securities 11,257 11,175 11,117 10,874 $ 21,968 $ 21,783 $ 19,091 $ 18,669 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. December 28, 2024 Amortized Cost Fair Value Due in less than one year $ 8,402 $ 8,332 Due after one year through five years 7,088 7,047 Due after five years through ten years 2,332 2,311 Mortgage-backed securities 4,146 4,093 $ 21,968 $ 21,783 Net investment gains and losses on marketable equity securities were as follows (in thousands): Three Months Ended Nine Months Ended December 28, 2024 December 30, 2023 December 28, 2024 December 30, 2023 Marketable equity securities Net gain (loss) recognized during the period $ ( 954 ) $ 776 $ ( 440 ) $ 1,051 Less: Net (gain) recognized on securities sold during the period ( 1,649 ) ( 235 ) ( 1,561 ) ( 365 ) Unrealized gain (loss) recognized during the period on securities still held $ ( 2,603 ) $ 541 $ ( 2,001 ) $ 686 5. Inventories Inventories consisted of the following (in thousands): December 28, 2024 March 30, 2024 Raw materials $ 78,631 $ 78,241 Work in process 30,027 27,977 Finished goods 134,641 135,121 $ 243,299 $ 241,339 6 Table of Contents 6. Consumer Loans Receivable The following table summarizes consumer loans receivable (in thousands): December 28, 2024 March 30, 2024 Loans held for investment, previously securitized $ 14,476 $ 16,968 Loans held for investment 11,898 12,826 Loans held for sale 23,233 15,140 Construction advances 6,042 722 55,649 45,656 Deferred financing fees and other, net ( 1,088 ) ( 523 ) Allowance for loan losses ( 925 ) ( 1,066 ) 53,636 44,067 Less current portion ( 33,242 ) ( 20,713 ) $ 20,394 $ 23,354 The consumer loans held for investment had the following characteristics: December 28, 2024 March 30, 2024 Weighted average contractual interest rate 8.1 % 8.1 % Weighted average effective interest rate 8.1 % 10.4 % Weighted average months to maturity 210 196 The following table is a consolidated summary of the delinquency status of the outstanding principal balance of consumer loans receivable (in thousands): December 28, 2024 March 30, 2024 Current $ 53,709 $ 43,810 31 to 60 days 996 1,063 61 to 90 days 373 131 91+ days 571 652 $ 55,649 $ 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): December 28, 2024 2025 2024 2023 2022 2021 Prior Total Prime- FICO score 680 and greater $ 15,726 $ 9,225 $ 324 $ 93 $ 766 $ 13,859 $ 39,993 Near Prime- FICO score 620-679 2,426 1,325 — — 1,033 8,874 13,658 Sub-Prime- FICO score less than 620 310 — — — 17 695 1,022 No FICO score 252 443 — — — 281 976 $ 18,714 $ 10,993 $ 324 $ 93 $ 1,816 $ 23,709 $ 55,649 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 December 28, 2024, 55 % 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 December 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): December 28, 2024 March 30, 2024 Loans receivable $ 94,902 $ 91,938 Allowance for loan losses ( 335 ) ( 781 ) Deferred financing fees, net ( 214 ) ( 116 ) 94,353 91,041 Less current portion of commercial loans receivable (including from affiliates), net ( 36,250 ) ( 43,316 ) $ 58,103 $ 47,725 The commercial loans receivable balance had the following characteristics: December 28, 2024 March 30, 2024 Weighted average contractual interest rate 7.7 % 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 December 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): December 28, 2024 2025 2024 2023 2022 2021 Total Performing $ 54,916 $ 27,832 $ 8,734 $ 1,466 $ 1,954 $ 94,902 March 30, 2024 2024 2023 2022 2021 2020 Total Performing $ 57,691 $ 25,066 $ 4,823 $ 2,144 $ 2,214 $ 91,938 As of December 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 December 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 December 28, 2024 or March 30, 2024. As of December 28, 2024 and March 30, 2024, one independent third-party and its affiliates comprised 10 % 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): December 28, 2024 March 30, 2024 Salaries, wages and benefits $ 44,338 $ 38,125 Customer deposits 39,795 40,856 Estimated warranties 34,412 31,718 Unearned insurance premiums 33,419 33,449 Accrued volume rebates 30,481 21,167 Insurance loss reserves 12,254 10,540 Accrued insurance 12,226 14,124 Other 52,209 49,757 $ 259,134 $ 239,736 9 Table of Contents 9. Warranties Activity in the liability for estimated warranties was as follows (in thousands): Three Months Ended Nine Months Ended December 28, 2024 December 30, 2023 December 28, 2024 December 30, 2023 Balance at beginning of period $ 33,081 $ 33,015 $ 31,718 $ 31,368 Charged to costs and expenses 14,322 11,341 40,403 36,956 Payments and deductions ( 12,991 ) ( 11,534 ) ( 37,709 ) ( 35,502 ) Balance at end of period $ 34,412 $ 32,822 $ 34,412 $ 32,822 10. Other Liabilities The following table summarizes secured financings and other obligations (in thousands): December 28, 2024 March 30, 2024 Finance lease liabilities $ 6,106 $ 6,166 Other secured financing 1,622 1,916 7,728 8,082 Less current portion included in Accrued expenses and other current liabilities ( 522 ) ( 323 ) $ 7,206 $ 7,759 11. Debt On November 12, 2024, the Company entered into that certain Amended and Restated Credit Agreement among the Company, Bank of America, N.A., as administrative agent, swing line lender, letter of credit issuer, and the guarantors party thereto (the "Credit Agreement"), providing for a $ 75 million revolving credit facility (the "Revolving Credit Facility"), including a $ 10 million letter of credit sub-facility. The Revolving Credit Facility matures on November 12, 2029. The Credit Agreement amends and restates the previous credit agreement between the parties entered into on November 22, 2022. Loans under the Revolving Credit Facility 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 1.25 % to 1.50 % per annum for Term SOFR rate loans and from 0.25 % to 0.50 % 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 0.20 % per annum. The Revolving Credit Facility is guaranteed, on a joint and several basis, by certain of the Company's subsidiaries. Subject to certain conditions and requirements set forth in the Credit Agreement, including the availability of additional lender commitments, the Company may request from time to time one or more term loan facilities, or increases in the aggregate commitments under the Revolving Credit Facility, in an aggregate amount not exceeding $ 75 million. The Credit Agreement contains customary representations and warranties, affirmative and negative covenants (including restrictions, subject to customary exceptions, qualifications, and baskets, on the ability of the Company and its subsidiaries to incur additional indebtedness or guarantees of indebtedness, pay dividends or distributions on, redeem, repurchase, or retire capital stock, make investments, loans, advances, or acquisitions, enter into sale and leaseback transactions, engage in transactions with affiliates, create liens, transfer or sell assets, create restrictions 10 Table of Contents on the payment of dividends or other distributions from subsidiaries, and consolidate, merge, or transfer all or substantially all of the assets of the Company and its subsidiaries taken as a whole), and events of default (as defined in the Credit Agreement). In addition, 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. As of December 28, 2024 and March 30, 2024, there were no borrowings outstanding under the Revolving Credit Facility or the previous credit agreement entered into on November 22, 2022 and we were in compliance with all covenants. 12. Reinsurance and Insurance Loss Reserves Certain of Standard Casualty Company's premiums and benefits are assumed from and ceded to other insurance companies under various reinsurance agreements. We remain obligated for amounts ceded in the event that the reinsurers do not meet their obligations. The effects of reinsurance on premiums written and earned were as follows (in thousands): Three Months Ended December 28, 2024 December 30, 2023 Written Earned Written Earned Direct premiums $ 19,260 $ 24,645 $ 11,135 $ 10,693 Assumed premiums—nonaffiliated 21,534 20,629 8,430 8,459 Ceded premiums—nonaffiliated ( 17,387 ) ( 17,387 ) ( 6,406 ) ( 6,406 ) $ 23,407 $ 27,887 $ 13,159 $ 12,746 Nine Months Ended December 28, 2024 December 30, 2023 Written Earned Written Earned Direct premiums $ 32,763 $ 36,947 $ 31,581 $ 28,740 Assumed premiums—nonaffiliated 33,269 30,133 27,735 25,880 Ceded premiums—nonaffiliated ( 25,572 ) ( 25,572 ) ( 18,971 ) ( 18,971 ) $ 40,460 $ 41,508 $ 40,345 $ 35,649 11 Table of Contents 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 reserve for the three and nine months ended December 28, 2024 a nd December 30, 2023 (in thousands): Three Months Ended Nine Months Ended December 28, 2024 December 30, 2023 December 28, 2024 December 30, 2023 Balance at beginning of period $ 14,620 $ 9,154 $ 10,540 $ 10,939 Net incurred losses during the period 9,662 9,489 41,753 29,152 Net claim payments during the period ( 12,028 ) ( 9,189 ) ( 40,039 ) ( 30,637 ) Balance at end of period $ 12,254 $ 9,454 $ 12,254 $ 9,454 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 $ 122 million and $ 121 million at December 28, 2024 and March 30, 2024, respectively, without reduction for the estimated resale value of the home s. In the quarter ended December 28, 2024 we received one repurchase demand notice for two homes. In all cases, the estimated fair value exceeded the repurchase price so no loss reserve was deemed necessary. Our reserve for repurchase commitments, re corded in Accrued expenses and other current liabilities, was $ 3.2 million at December 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): December 28, 2024 March 30, 2024 Construction loan contract amount $ 12,669 $ 1,960 Cumulative advances ( 6,042 ) ( 722 ) $ 6,627 $ 1,238 Representations and Warranties of Mortgages Sold . The reserve for contingent repurchases and indemnification obliga tions was $ 0.7 million as of December 28, 2024 and $ 0.6 million as of 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 nine months ended December 28, 2024 or December 30, 2023 . Interest Rate Lock Commitments ("IRLCs") . As of December 28, 2024 and March 30, 2024, we had outstanding IRLCs with a notional amount of $ 10.1 million and $ 39.0 million, respectively. For the three and nine months ended December 28, 2024, we recognized insignificant non-cash losses and gains, respectively, on outstanding IRLCs. For the three and nine months ended December 30, 2023, we recognized insignificant non-cash gains and losses on outstanding IRLCs. Forward Sales Commitments . As of December 28, 2024 and March 30, 2024, we had $ 15.0 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 nine months ended December 28, 2024, we recognized insignificant non-cash gains. During the three and nine months ended December 30, 2023, we recognized insignificant non-cash losses. 12 Table of Contents 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. 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 nine months ended December 28, 2024 and December 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 Net income — — — — 56,462 — 56,462 Other comprehensive income, net — — — — — ( 70 ) ( 70 ) Net issuance of common stock under stock incentive plans 5,637 — — ( 168 ) — — ( 168 ) Stock-based compensation — — — 1,746 — — 1,746 Common stock repurchases — — ( 42,722 ) — — — ( 42,722 ) Balance, December 28, 2024 9,422,969 $ 94 $ ( 391,128 ) $ 286,573 $ 1,161,833 $ ( 147 ) $ 1,057,225 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 — Net income — — — — 35,987 — 35,987 — Other comprehensive income, net — — — — — 241 241 — Net issuance of common stock under stock incentive plans 24,726 — — 1,934 — — 1,934 — Stock-based compensation — — — 1,709 — — 1,709 — Common stock repurchases — — ( 50,426 ) — — — ( 50,426 ) — Balance, December 30, 2023 9,381,147 $ 94 $ ( 262,072 ) $ 277,847 $ 993,193 $ ( 362 ) $ 1,008,700 $ — 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 Nine Months Ended December 28, 2024 December 30, 2023 December 28, 2024 December 30, 2023 Net income attributable to Cavco common stockholders $ 56,462 $ 35,987 $ 134,706 $ 123,883 Weighted average shares outstanding Basic 8,096,538 8,358,389 8,203,448 8,561,209 Effect of dilutive securities 90,276 74,082 88,199 79,079 Diluted 8,186,814 8,432,471 8,291,647 8,640,288 Net income per share attributable to Cavco common stockholders Basic $ 6.97 $ 4.31 $ 16.42 $ 14.47 Diluted $ 6.90 $ 4.27 $ 16.25 $ 14.34 Anti-dilutive common stock equivalents excluded — — 169 316 16. Fair Value Measurements The book value and estimated fair value of our financial instruments were as follows (in thousands): December 28, 2024 March 30, 2024 Book Value Estimated Fair Value Book Value Estimated Fair Value Available-for-sale debt securities $ 21,783 $ 21,783 $ 18,669 $ 18,669 Marketable equity securities 7,434 7,434 11,961 11,961 Non-marketable equity investments 5,132 5,132 4,956 4,956 Consumer loans receivable 53,636 57,114 44,067 49,105 Commercial loans receivable 94,353 79,664 91,041 80,764 Other secured financing ( 1,622 ) ( 1,536 ) ( 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. December 28, 2024 March 30, 2024 Number of loans serviced with MSRs 3,693 3,842 Weighted average servicing fee (basis points) 34.80 34.79 Capitalized servicing multiple 186.29 % 188.59 % Capitalized servicing rate (basis points) 64.83 65.61 Serviced portfolio with MSRs (in thousands) $ 458,268 $ 482,898 MSRs (in thousands) $ 2,971 $ 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 Nine Months Ended December 28, 2024 December 30, 2023 December 28, 2024 December 30, 2023 Net revenue: Factory-built housing $ 500,860 $ 426,939 $ 1,445,251 $ 1,318,114 Financial services 21,180 19,830 61,849 56,560 $ 522,040 $ 446,769 $ 1,507,100 $ 1,374,674 Income (loss) before income taxes: Factory-built housing $ 63,150 $ 42,070 $ 168,155 $ 154,121 Financial services 6,186 1,837 ( 8 ) 2,124 $ 69,336 $ 43,907 $ 168,147 $ 156,245 December 28, 2024 March 30, 2024 Total assets: Factory-built housing $ 1,160,795 $ 1,141,237 Financial services 224,972 212,923 $ 1,385,767 $ 1,354,160 16 Table of Contents