Cavco Industries, Inc. (Nasdaq: CVCO) today provided a business and
operations update regarding the novel coronavirus COVID-19
("COVID-19") pandemic. The Company is taking actions to minimize
exposure and transmission risks while continuing to serve its
customers, support its suppliers and maintain a safe work
environment for its employees.
As more state and local jurisdictions enact
"shelter in place" or "stay at home" orders, the Company has been
carefully evaluating each individual directive to determine the
appropriate course of action. Based on current guidance from the
Department of Homeland Security, housing construction operations
are considered essential and can remain in operation during the
COVID-19 pandemic. While it is not mandatory for state and local
jurisdictions to follow this federal guidance, many state and local
jurisdiction restrictive orders provide exceptions for sectors or
industries designated to be an essential business, including
residential home building.
The Company has continued to operate
substantially all of its homebuilding and retail sales facilities
while working to follow the COVID-19 health guidelines. In addition
to health and regulatory guidelines, the Company is sensitive to
the variety of factors that are involved in decisions to operate at
each location, including the perspectives of employees, local
communities, suppliers, retail distributors, and of course, our
homebuyers.
Bill Boor, President and Chief Executive Officer
said, "We believe that the Company is well positioned to execute
during these uncertain times. We can adjust our production levels
on a daily basis, as dictated by the evolving circumstances. We
entered the current quarter with a healthy home order backlog and a
strong cash position. As a result, during this challenging period,
we are focusing on the responsibilities we have to our employees,
customers, suppliers and communities."
The Company has instituted a task force to make
ongoing operating decisions and direct implementation of
recommendations from the Centers for Disease Control, the World
Health Organization and other health authorities. The Company's
manufacturing operations are generally producing homes at lower
rates of production in order to operate in accordance with the
added health-related guidelines. Employee policies have been
adjusted accordingly to accommodate the needs of our people. Where
possible, work-from-home options are in place while also allowing
for workplace flexibility as needed. The Company has also suspended
non-critical business travel.
Home sales order activity is being assessed on
an ongoing basis. While not currently quantifiable, the Company is
receiving fewer home orders from its independent distribution
channels and Company-owned retail stores than would be typically
expected during the spring selling period. While Company-owned
stores and most independently owned sales locations are open for
business, customer traffic is understandably declining. At the
request of some retailers, certain home orders included in the
Company's backlog, but for which construction has not begun, have
been paused and others have been canceled. The Company cannot
predict the impact on housing demand or the continuation of
operations at each location due to the COVID-19 situation.
Generally, our wholesale customers have been positive about
continuing the process of delivering homes and supportive of our
efforts to continue production to meet housing needs.
The Company continues to closely communicate
with its suppliers and monitor supply chain risks. The Company's
primary suppliers are domestic. The ability for suppliers to
fulfill orders on behalf of the Company on pre-existing terms are
dependent upon their particular circumstances including those
related to the COVID-19 pandemic. Some suppliers have reduced
operations and others have closed temporarily with stated plans to
re-open. While the Company is adjusting to maintain supplies, as
needed, some factory operations have been adversely affected and
could experience further disruption. Because supply disruptions can
emerge quickly, contingency plans are in place to minimize
them.
Financial and Insurance service operations
continue to operate as well, largely through the implementation of
work-from-home solutions. This includes accepting and processing
new applications as well as servicing home loans and insurance
policies. The Company is complying with all state and federal
regulations regarding foreclosures and is assisting customers in
need due to the COVID-19 pandemic.
Mr. Boor went on to say, "I'm extremely proud of
how people across the Company are demonstrating a great deal of
creativity, flexibility and commitment as we continue the important
work of providing affordable housing, while at the same time we are
rising to the challenge of implementing necessary health
practices."
About Cavco
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, Fleetwood, Palm Harbor, Fairmont,
Friendship, Chariot Eagle, Lexington and Destiny. The Company is
also a leading producer of park model RVs, vacation cabins and
systems-built commercial structures, as well as modular homes.
Cavco's finance subsidiary, CountryPlace Mortgage, is an approved
Fannie Mae and Freddie Mac seller/servicer and 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.
Risk Factor Update1
The impact of local or national emergencies,
including the COVID-19 pandemic, can adversely affect our financial
results, conditions and prospects
Severe weather conditions, natural disasters,
hostilities and social unrest, terrorist activities, health
epidemics or pandemics or other local or national emergencies can
adversely affect consumer spending and confidence levels and supply
availability and costs, as well as the local operations in impacted
markets, all of which can affect our financial results, condition
and prospects. The Company's sales of affordable homes is largely
dependent on the ability of consumers to obtain financing for the
purchase of a home. Consumer financing is dependent on a number of
economic factors, including the employment status of borrowers,
which may be adversely affected by local or national emergencies.
Consumer confidence is also an important factor to support home
purchases and is also subject to the adverse effects of an
emergency situation. The Company's products are produced in a
manner that is considered labor-intensive and requires a consistent
and available workforce which may be adversely affected by a large
scale decline in public health conditions or other emergencies. As
it relates to the COVID-19 pandemic, the Company's primary
suppliers are domestic, while also depending on materials
originating from China. The ability for suppliers to fulfill orders
on behalf of the Company on pre-existing terms are dependent upon
their particular circumstances, including those related to the
COVID-19 pandemic. The magnitude of the COVID-19 pandemic,
including the extent of any impact on Cavco's business, financial
position, results of operations or liquidity, which could be
material, cannot be reasonably estimated at this time because of
the rapid development and fluidity of the situation. It will depend
on the duration of the pandemic, its geographic spread, potential
business disruptions and the overall impact on the national economy
and consumer behavior.
1 This risk factor is intended to be an
update to the Risk Factors found in our 10-K filed on May 28,
2019.
Forward-Looking Statements
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: the impact of local or national emergencies, including
the COVID-19 pandemic; our ability to successfully integrate past
acquisitions or future acquisitions and 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; information technology failures or cyber incidents;
curtailment of available financing from home-only lenders;
availability of wholesale financing and limited floor plan lenders;
our participation in certain wholesale and retail financing
programs for the purchase of our products by industry distributors
and consumers, which 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 our ability to 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 and the 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 turmoil in the
credit markets; governmental and regulatory disruption, including
federal government shutdowns; extensive regulation affecting
manufactured housing; potential financial impact on the Company
from the subpoenas we received from the SEC, including the risk of
potential litigation or regulatory action, and costs and expenses
arising from the SEC subpoenas and the events described in or
covered by the SEC subpoenas, which include the Company's
indemnification obligations and insurance costs regarding such
matters, and potential reputational damage that the Company may
suffer; and losses not covered by our director and officer
insurance may be large, adversely impacting financial performance;
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 2019 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 undue
reliance on any such forward-looking statements.
For additional information, contact:
Mark Fusler Director of Financial Reporting and
Investor Relations investor_relations@cavco.com
Phone: 602-256-6263 On the
Internet: www.cavco.com
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