Cavco Industries Reports Fiscal 2019 First Quarter Results
06 August 2018 - 10:05PM
Cavco Industries, Inc. (NASDAQ: CVCO) today announced financial
results for the first fiscal quarter ended June 30, 2018.
Financial highlights include the following:
- Net revenue for the first quarter of fiscal
year 2019 totaled $246.4 million, up 19.1% from $206.8 million in
the first quarter of fiscal year 2018. The increase was primarily
from improved home sales volume and higher home selling prices from
input cost inflation and modestly larger home sizes. Current
quarter net revenue also includes $6.5 million from this quarter's
required implementation of accounting standards
whereby subcontracted pass-through services, such as the
preparation of a home site or other home enhancements, are now
recognized on a gross basis rather than net of associated
costs.
- Income before income taxes was $24.1 million
for the first quarter of fiscal year 2019, a 53.5% increase from
$15.7 million in the comparable quarter last year. As part of this
increase, $1.5 million in unrealized gains on corporate investments
from this quarter's implementation of new accounting standards was
recorded in other income, net. Unrealized gains and losses are now
required to be reported on the Consolidated Statement of
Comprehensive Income instead of recording these amounts in
accumulated other comprehensive income on the Consolidated Balance
Sheet.
- Income tax expense was $4.4 million, resulting
in an effective tax rate of 18.4% for the first quarter of fiscal
year 2019 compared to $3.9 million and an effective tax rate of
24.9% in the same quarter of the prior year. The current fiscal
quarter was benefited by the Tax Cuts and Jobs Act (the "Tax Act"),
which was enacted on December 22, 2017. The Tax Act reduced the
federal corporate tax rate to 21% for our fiscal year
ending March 30, 2019. In addition, the current quarter includes a
deduction of $1.2 million related to excess tax benefits from
exercises of stock options, compared to $1.4 million deducted
in the prior year period.
- Net income was $19.7 million for the first
quarter of fiscal year 2019, compared to net income of $11.8
million in the same quarter of the prior year, a 66.9% increase.
Diluted net income per share for the first quarter of fiscal 2019
was $2.12 compared to diluted net income per share of $1.28 for the
comparable quarter last year.
Commenting on the quarter, Joseph Stegmayer,
Chairman, President and Chief Executive Officer, said, "Cavco's
home order rates continue to benefit from the improving housing
market and economy. At the end of the first fiscal quarter, Cavco’s
sales order backlog was $196 million compared to $137 million at
the end of the same quarter last year. The tight labor market
remains a challenge; accordingly we continue to focus our efforts
on talent recruiting, training and retention programs, along with
increasing factory production rates by investing in production
capacity and efficiency initiatives."
Cavco’s management will hold a conference call
to review these results tomorrow, August 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 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 2018 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)
|
June 30, 2018 |
|
March 31, 2018 |
ASSETS |
(Unaudited) |
|
|
Current assets: |
|
|
|
Cash and
cash equivalents |
$ |
177,487 |
|
|
$ |
186,766 |
|
Restricted cash, current |
12,918 |
|
|
11,228 |
|
Accounts
receivable, net |
39,922 |
|
|
35,043 |
|
Short-term investments |
14,268 |
|
|
11,866 |
|
Current
portion of consumer loans receivable, net |
34,450 |
|
|
31,096 |
|
Current
portion of commercial loans receivable, net |
10,902 |
|
|
5,481 |
|
Inventories |
110,437 |
|
|
109,152 |
|
Prepaid
expenses and other current assets |
28,853 |
|
|
27,961 |
|
Total current
assets |
429,237 |
|
|
418,593 |
|
Restricted cash |
1,066 |
|
|
1,264 |
|
Investments |
32,879 |
|
|
33,573 |
|
Consumer loans
receivable, net |
63,707 |
|
|
63,855 |
|
Commercial loans
receivable, net |
19,731 |
|
|
11,120 |
|
Property, plant and
equipment, net |
64,005 |
|
|
63,355 |
|
Goodwill and other
intangibles, net |
82,936 |
|
|
83,020 |
|
Total assets |
$ |
693,561 |
|
|
$ |
674,780 |
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
Current
liabilities: |
|
|
|
Accounts
payable |
$ |
24,615 |
|
|
$ |
23,785 |
|
Accrued
liabilities |
126,774 |
|
|
126,500 |
|
Current
portion of securitized financings and other |
24,237 |
|
|
26,044 |
|
Total current
liabilities |
175,626 |
|
|
176,329 |
|
Securitized financings
and other |
33,884 |
|
|
33,768 |
|
Deferred income
taxes |
8,364 |
|
|
7,577 |
|
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 9,061,306 and 9,044,858 shares, respectively |
91 |
|
|
90 |
|
Additional paid-in capital |
244,627 |
|
|
246,197 |
|
Retained
earnings |
231,147 |
|
|
209,381 |
|
Accumulated other comprehensive income (loss) |
(178 |
) |
|
1,438 |
|
Total stockholders’
equity |
475,687 |
|
|
457,106 |
|
Total liabilities and
stockholders’ equity |
$ |
693,561 |
|
|
$ |
674,780 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CAVCO INDUSTRIES,
INC.CONSOLIDATED STATEMENTS OF COMPREHENSIVE
INCOME(Dollars in thousands, except per share
amounts)(Unaudited)
|
Three Months Ended |
|
June 30, 2018 |
|
July 1, 2017 |
Net revenue |
$ |
246,403 |
|
|
$ |
206,816 |
|
Cost of sales |
194,927 |
|
|
164,850 |
|
Gross profit |
51,476 |
|
|
41,966 |
|
Selling, general and
administrative expenses |
29,213 |
|
|
26,305 |
|
Income from
operations |
22,263 |
|
|
15,661 |
|
Interest expense |
(972 |
) |
|
(1,048 |
) |
Other income, net |
2,845 |
|
|
1,038 |
|
Income before income
taxes |
24,136 |
|
|
15,651 |
|
Income tax expense |
(4,445 |
) |
|
(3,898 |
) |
Net income |
$ |
19,691 |
|
|
$ |
11,753 |
|
|
|
|
|
|
|
|
|
Net income per
share: |
|
|
|
Basic |
$ |
2.18 |
|
|
$ |
1.30 |
|
Diluted |
$ |
2.12 |
|
|
$ |
1.28 |
|
Weighted average shares
outstanding: |
|
|
|
Basic |
9,048,579 |
|
|
9,006,999 |
|
Diluted |
9,267,048 |
|
|
9,162,491 |
|
|
|
|
|
|
|
|
|
|
|
|
|
CAVCO INDUSTRIES,
INC.OTHER OPERATING DATA(Dollars in
thousands)(Unaudited)
|
Three Months Ended |
|
June 30, 2018 |
|
July 1, 2017 |
Net revenue: |
|
|
|
Factory-built housing |
$ |
232,762 |
|
|
$ |
192,882 |
|
Financial
services |
13,641 |
|
|
13,934 |
|
Total net revenue |
$ |
246,403 |
|
|
$ |
206,816 |
|
|
|
|
|
Income before income
taxes: |
|
|
|
Factory-built housing |
$ |
21,608 |
|
|
$ |
13,170 |
|
Financial
services |
2,528 |
|
|
2,481 |
|
Total income before
income taxes |
$ |
24,136 |
|
|
$ |
15,651 |
|
|
|
|
|
Capital
expenditures |
$ |
1,679 |
|
|
$ |
594 |
|
Depreciation |
$ |
1,020 |
|
|
$ |
882 |
|
Amortization of other
intangibles |
$ |
84 |
|
|
$ |
92 |
|
|
|
|
|
Total factory-built
homes sold |
3,887 |
|
|
3,475 |
|
|
|
|
|
|
|
For additional information, contact:
Dan Urness CFO and
Treasurerdanu@cavco.com
Phone: 602-256-6263On the
Internet: www.cavco.com
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