Cavco Industries Reports Fiscal 2018 Third Quarter Results
06 Februar 2018 - 10:05PM
Cavco Industries, Inc. (NASDAQ:CVCO) today announced financial
results for the third fiscal quarter ended December 30, 2017.
On April 3, 2017, the Company completed the acquisition of
Lexington Homes, Inc., which operates a manufactured housing plant
in Lexington, Mississippi. Since the acquisition date, the results
from this new business are included in Cavco's consolidated
financial statements presented herein.
Financial highlights include the following:
- Net revenue for the third quarter of fiscal
year 2018 totaled $221.4 million, up 9.4% from $202.3 million for
the third quarter of fiscal year 2017. Net revenue for the first
nine months of fiscal 2018 was $628.7 million, up 9.2% from $575.8
million for the comparable prior year period. The increase was from
improved home sales volume and a larger proportion of higher priced
homes sold.
- Income before income taxes was $23.7 million
for the third quarter of fiscal year 2018, a 37.0% increase from
$17.3 million in the comparable quarter last year. For the first
nine months of fiscal 2018, income before income taxes increased
23.2% to $47.8 million from $38.8 million in the comparable period
of the prior year. The improvements were from increased home sales
volume and pricing, a $3.4 million favorable dispute settlement
resolution during the third fiscal quarter, and improved earnings
in the financial services segment.
- Income tax expense was $2.2 million, resulting
in an effective tax rate of 9.5% for the third quarter of fiscal
year 2018 compared to $5.0 million and an effective tax rate of
28.9% in the same quarter of the prior year. On December 22, 2017,
the U.S. government enacted comprehensive tax legislation commonly
referred to as the Tax Cuts and Jobs Act (the "Tax Act"), which
made broad and complex changes to the U.S. tax code. In connection
with lower federal income tax liability related to the Tax Act
and revaluation of the net deferred income tax balance, the Company
has recorded a net income tax benefit of $5.6 million (or $0.61 per
diluted share) in the third quarter ended December 30, 2017.For the
nine months ended December 30, 2017, income tax expense was $8.5
million for an effective tax rate of 17.7%, compared to income tax
expense of $11.7 million and an effective tax rate of 30.3% in the
comparable period. In addition to the Tax Act effect benefits,
income tax expense for the nine months ended December 30, 2017 also
includes a tax benefit of $1.7 million, related to the Company's
required implementation of Accounting Standards Update No.
2016-09, Compensation-Stock Compensation (Topic 718):
Improvement to Employee Share-based Payment Accounting, which,
among other items, requires the Company to record excess tax
benefits on exercises of stock options as a reduction of income tax
expense in the consolidated statement of comprehensive income,
whereas they were previously recognized in equity.
- Net income was $21.4 million for the third
quarter of fiscal year 2018, compared to net income of $12.3
million in the same quarter of the prior year, a 74.0% increase.
For the nine months ended December 30, 2017, net income was $39.4
million, up 45.4% from net income of $27.1 million for the first
nine months of fiscal 2017.
- Net income per share for the third quarter of
fiscal 2018, based on basic and diluted weighted average shares
outstanding, was $2.37 and $2.33, respectively, compared to net
income per share of $1.37 and $1.35, respectively, for the
comparable quarter last year. Net income per share for the nine
months ended December 30, 2017, based on basic and diluted weighted
average shares outstanding, was $4.36 and $4.28, respectively,
versus basic and diluted net income per share of $3.02 and $2.98,
respectively, for the prior nine month period.
Commenting on the quarter, Joseph Stegmayer,
Chairman, President and Chief Executive Officer said, "We are
pleased with this quarter’s results which were aided by improved
order rates during traditionally slower holiday months. Strong new
single-family housing demand continued to drive opportunities for
increased unit sales volume. In response, our manufacturing
facilities raised production levels by increasing our workforce
size and capabilities."
Mr. Stegmayer continued, "The constrained labor
market coupled with continued cost increases for raw materials
remain key challenges to further increasing production rates and
financial performance. However, our home production systems utilize
labor and materials more efficiently than many other home
construction alternatives. The Company has the ability to raise
sales prices of its home offerings in response to rising input
costs, although larger-than-normal home order backlogs have caused
some delay in fully realizing the benefits of higher home product
pricing."
Cavco’s management will hold a conference call
to review these results tomorrow, February 7, 2018, at 1:00 PM
(Eastern Time). Interested parties can access a live webcast of the
conference call on the Internet at www.cavco.com under the Investor
Relations link. An archive of the webcast and presentation will be
available for 90 days at www.cavco.com under the Investor Relations
link.
Cavco Industries, Inc., headquartered in
Phoenix, Arizona, designs and produces factory-built housing
products primarily distributed through a network of independent and
Company-owned retailers. The Company is one of the largest
producers of manufactured homes in the United States, based on
reported wholesale shipments, marketed under a variety of brand
names including Cavco Homes, Fleetwood Homes, Palm Harbor Homes,
Fairmont Homes, Friendship Homes, Chariot Eagle and Lexington
Homes. The Company is also a leading producer of park model RVs,
vacation cabins, and systems-built commercial structures, as well
as modular homes built primarily under the Nationwide Homes brand.
Cavco’s mortgage subsidiary, CountryPlace Mortgage, is an approved
Fannie Mae and Freddie Mac seller/servicer, a Ginnie Mae
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 to owners of manufactured
homes.
Certain statements contained in this release are
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, Section 21E of the Securities and Exchange
Act of 1934 and the Private Securities Litigation Reform Act of
1995. In general, all statements that are not historical in nature
are forward-looking. Forward-looking statements are typically
included, for example, in discussions regarding the manufactured
housing and site-built housing industries; our financial
performance and operating results; and the expected effect of
certain risks and uncertainties on our business, financial
condition and results of operations. All forward-looking statements
are subject to risks and uncertainties, many of which are beyond
our control. As a result, our actual results or performance may
differ materially from anticipated results or performance. Factors
that could cause such differences to occur include, but are not
limited to: adverse industry conditions; our ability to
successfully integrate past acquisitions, including the recent
acquisition of Lexington Homes, and any future acquisition or the
ability to attain the anticipated benefits of such acquisitions;
the risk that any past or future acquisition may adversely impact
our liquidity; involvement in vertically integrated lines of
business, including manufactured housing consumer finance,
commercial finance and insurance; a constrained consumer financing
market; curtailment of available financing for retailers in the
manufactured housing industry; our participation in certain
wholesale and retail financing programs for the purchase of our
products by industry distributors and consumers may expose us to
additional risk of credit loss; significant warranty and
construction defect claims; our contingent repurchase
obligations related to wholesale financing; market forces and
housing demand fluctuations; net losses were incurred in certain
prior periods and there can be no assurance that we will generate
income in the future; a write-off of all or part of our goodwill;
the cyclical and seasonal nature of our business; limitations on
our ability to raise capital; competition; our ability to maintain
relationships with independent distributors; our business and
operations being concentrated in certain geographic regions; labor
shortages; pricing and availability of raw materials; unfavorable
zoning ordinances; loss of any of our executive officers;
organizational document provisions delaying or making a change in
control more difficult; volatility of stock price; general
deterioration in economic conditions and continued turmoil in the
credit markets; increased costs of healthcare benefits for
employees; governmental and regulatory disruption; information
technology failures and data security breaches; extensive
regulation affecting manufactured housing; together with all of the
other risks described in our filings with the Securities and
Exchange Commission. Readers are specifically referred to the Risk
Factors described in Item 1A of the 2017 Form 10-K, as may be
amended from time to time, which identify important risks that
could cause actual results to differ from those contained in the
forward-looking statements. Cavco expressly disclaims any
obligation to update any forward-looking statements contained in
this release, whether as a result of new information, future events
or otherwise. Investors should not place any reliance on any such
forward-looking statements.
|
|
|
|
CAVCO INDUSTRIES,
INC.CONSOLIDATED BALANCE SHEETS(Dollars
in thousands, except per share amounts) |
|
|
|
|
|
December 30, 2017 |
|
April 1, 2017 |
ASSETS |
(Unaudited) |
|
|
Current assets: |
|
|
|
Cash and
cash equivalents |
$ |
138,974 |
|
|
$ |
132,542 |
|
Restricted cash, current |
9,993 |
|
|
11,573 |
|
Accounts
receivable, net |
41,501 |
|
|
31,221 |
|
Short-term investments |
14,502 |
|
|
11,289 |
|
Current
portion of consumer loans receivable, net |
32,186 |
|
|
31,115 |
|
Current
portion of commercial loans receivable, net |
6,823 |
|
|
7,932 |
|
Inventories |
105,872 |
|
|
93,855 |
|
Prepaid
expenses and other current assets |
34,112 |
|
|
28,033 |
|
Deferred
income taxes, current |
— |
|
|
9,204 |
|
Total current
assets |
383,963 |
|
|
356,764 |
|
Restricted cash |
728 |
|
|
724 |
|
Investments |
34,631 |
|
|
30,256 |
|
Consumer loans
receivable, net |
62,806 |
|
|
64,686 |
|
Commercial loans
receivable, net |
20,031 |
|
|
17,901 |
|
Property, plant and
equipment, net |
58,969 |
|
|
56,964 |
|
Goodwill and other
intangibles, net |
83,025 |
|
|
80,021 |
|
Total assets |
$ |
644,153 |
|
|
$ |
607,316 |
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
Current
liabilities: |
|
|
|
Accounts
payable |
$ |
19,835 |
|
|
$ |
24,010 |
|
Accrued
liabilities |
123,661 |
|
|
109,789 |
|
Current
portion of securitized financings and other |
5,761 |
|
|
6,417 |
|
Total current
liabilities |
149,257 |
|
|
140,216 |
|
Securitized financings
and other |
51,530 |
|
|
51,574 |
|
Deferred income
taxes |
7,794 |
|
|
21,118 |
|
Stockholders’
equity: |
|
|
|
Preferred
stock, $.01 par value; 1,000,000 shares authorized; No shares
issued or outstanding |
— |
|
|
— |
|
Common
stock, $.01 par value; 40,000,000 shares authorized; Outstanding
9,035,294 and 8,994,968 shares, respectively |
90 |
|
|
90 |
|
Additional paid-in capital |
245,605 |
|
|
244,791 |
|
Retained
earnings |
187,572 |
|
|
148,141 |
|
Accumulated other comprehensive income |
2,305 |
|
|
1,386 |
|
Total stockholders’
equity |
435,572 |
|
|
394,408 |
|
Total liabilities and
stockholders’ equity |
$ |
644,153 |
|
|
$ |
607,316 |
|
|
|
|
|
|
|
|
|
|
|
|
|
CAVCO INDUSTRIES,
INC.CONSOLIDATED STATEMENTS OF COMPREHENSIVE
INCOME(Dollars in thousands, except per share
amounts)(Unaudited) |
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
December 30, 2017 |
|
December 31, 2016 |
|
December 30, 2017 |
|
December 31, 2016 |
Net revenue |
$ |
221,383 |
|
|
$ |
202,310 |
|
|
$ |
628,706 |
|
|
$ |
575,799 |
|
Cost of sales |
171,527 |
|
|
158,766 |
|
|
502,330 |
|
|
459,896 |
|
Gross profit |
49,856 |
|
|
43,544 |
|
|
126,376 |
|
|
115,903 |
|
Selling, general and
administrative expenses |
26,045 |
|
|
26,003 |
|
|
78,503 |
|
|
76,119 |
|
Income from
operations |
23,811 |
|
|
17,541 |
|
|
47,873 |
|
|
39,784 |
|
Interest expense |
(1,236 |
) |
|
(1,091 |
) |
|
(3,305 |
) |
|
(3,384 |
) |
Other income, net |
1,094 |
|
|
829 |
|
|
3,251 |
|
|
2,407 |
|
Income before income
taxes |
23,669 |
|
|
17,279 |
|
|
47,819 |
|
|
38,807 |
|
Income tax expense |
(2,242 |
) |
|
(4,996 |
) |
|
(8,457 |
) |
|
(11,740 |
) |
Net income |
$ |
21,427 |
|
|
$ |
12,283 |
|
|
$ |
39,362 |
|
|
$ |
27,067 |
|
|
|
|
|
|
|
|
|
Comprehensive
income: |
|
|
|
|
|
|
|
Net
income |
$ |
21,427 |
|
|
$ |
12,283 |
|
|
$ |
39,362 |
|
|
$ |
27,067 |
|
Unrealized gain on available-for-sale securities, net of tax |
315 |
|
|
253 |
|
|
919 |
|
|
1,077 |
|
Comprehensive income |
$ |
21,742 |
|
|
$ |
12,536 |
|
|
$ |
40,281 |
|
|
$ |
28,144 |
|
|
|
|
|
|
|
|
|
Net income per
share: |
|
|
|
|
|
|
|
Basic |
$ |
2.37 |
|
|
$ |
1.37 |
|
|
$ |
4.36 |
|
|
$ |
3.02 |
|
Diluted |
$ |
2.33 |
|
|
$ |
1.35 |
|
|
$ |
4.28 |
|
|
$ |
2.98 |
|
Weighted average shares
outstanding: |
|
|
|
|
|
|
|
Basic |
9,030,100 |
|
|
8,992,456 |
|
|
9,019,311 |
|
|
8,970,008 |
|
Diluted |
9,214,898 |
|
|
9,102,562 |
|
|
9,186,042 |
|
|
9,096,442 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CAVCO INDUSTRIES, INC.OTHER
OPERATING DATA(Dollars in thousands)(Unaudited) |
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
December 30, 2017 |
|
December 31, 2016 |
|
December 30, 2017 |
|
December 31, 2016 |
Net revenue: |
|
|
|
|
|
|
|
Factory-built housing |
$ |
207,183 |
|
|
$ |
188,546 |
|
|
$ |
587,445 |
|
|
$ |
536,513 |
|
Financial
services |
14,200 |
|
|
13,764 |
|
|
41,261 |
|
|
39,286 |
|
Total net revenue |
$ |
221,383 |
|
|
$ |
202,310 |
|
|
$ |
628,706 |
|
|
$ |
575,799 |
|
|
|
|
|
|
|
|
|
Income (loss) before
income taxes: |
|
|
|
|
|
|
|
Factory-built housing |
$ |
18,393 |
|
|
$ |
12,370 |
|
|
$ |
40,147 |
|
|
$ |
33,437 |
|
Financial
services |
5,276 |
|
|
4,909 |
|
|
7,672 |
|
|
5,370 |
|
Total income before
income taxes |
$ |
23,669 |
|
|
$ |
17,279 |
|
|
$ |
47,819 |
|
|
$ |
38,807 |
|
|
|
|
|
|
|
|
|
Capital
expenditures |
$ |
1,246 |
|
|
$ |
1,238 |
|
|
$ |
3,025 |
|
|
$ |
4,343 |
|
Depreciation |
$ |
933 |
|
|
$ |
818 |
|
|
$ |
2,699 |
|
|
$ |
2,486 |
|
Amortization of other
intangibles |
$ |
92 |
|
|
$ |
92 |
|
|
$ |
276 |
|
|
$ |
276 |
|
|
|
|
|
|
|
|
|
Total factory-built
homes sold |
3,701 |
|
|
3,486 |
|
|
10,474 |
|
|
10,123 |
|
|
|
|
|
|
|
|
|
|
|
|
|
For additional information,
contact:
Dan UrnessCFO and
Treasurerdanu@cavco.comPhone:
602-256-6263On the Internet: www.cavco.com
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