Cavco Industries, Inc. (Nasdaq: CVCO) (“Cavco” or the “Company”)
announced today that it has signed a binding offer to acquire the
business and certain assets and liabilities of The Commodore
Corporation (“Commodore”), including its six manufacturing
facilities and two wholly owned retail locations. Commodore is the
largest independent builder of manufactured and modular housing in
the United States, operating under a variety of brand names such as
Commodore Homes of Pennsylvania, Commodore Homes of Indiana, Colony
Homes, MidCountry Homes, Pennwest Homes and R-Anell Homes.
Commodore has over 1,200 employees and operates across the
Northeast, Midwest and Mid-Atlantic regions, with wholly owned
retail stores in Indiana and New York. In addition to
manufacturing, Commodore also participates in commercial lending
operations with its dealers that Cavco will also acquire and
continue the existing programs. For the last 12 months ended March
31, 2021, Commodore generated net sales of approximately $258
million and sold over 6,600 modules, equating to over 3,700 homes.
The purchase price totals $153 million, before
certain adjustments that will be determined upon close of the
transaction. The estimated cash outlay is $140 million after
adjustments and including transaction fees. Cavco expects to fund
the acquisition entirely with cash on hand.
Bill Boor, Cavco President and Chief Executive Officer, said,
“During the acquisition process, we have developed a tremendous
respect for what has been accomplished at Commodore under Barry
Shein’s leadership. Their reputation for quality, design, customer
relationships, and integrity is very consistent with Cavco’s
philosophy and approach to doing business. We are extremely excited
to work with the Commodore leadership and employees as we leverage
best practices and technologies across the combined manufacturing
network. Commodore’s market presence is a strategic extension of
our current footprint, providing a platform for additional growth
in the Northeast.”
Barry Shein, President and Chief Executive Officer of Commodore,
commented, “What was most important to me and the other members of
Commodore’s leadership was to find the best fit for our company and
employees, and we’ve found that in Cavco. Based on their vision for
the industry and business philosophy, I have complete confidence
that this is the right move for our dedicated associates, our
valued suppliers, and our long-time customers. I offer my full
support to ensure a smooth transition and a successful future for
Commodore and its employees as part of the Cavco family.”
Highlights of the proposed transaction:
- Financial
Impact: Cavco expects this proposed acquisition to be
significantly accretive to earnings and cash flow from operations
in fiscal year 2022.
- Capital
Allocation: Following this strategic deployment of
existing cash, Cavco will still maintain a significant cash
position available for other investments.
- Geographic
Footprint: The addition of Commodore will expand Cavco’s
geographic reach into the Northeast United States, while enhancing
its presence in the Midwest and Mid-Atlantic markets.
-
Leadership: Commodore brings a strategic and
innovative management team with a great cultural fit with Cavco’s
values and local management philosophy. Their continued leadership
will play a critical role in the Company’s long-term success.
- Potential
for operational and revenue synergies: Best practice
implementation will create significant manufacturing cost and
efficiency improvements across the combined company. In addition to
approaches Cavco can bring to the Commodore operations, Commodore
has developed and implemented advanced manufacturing technologies
that will lead to significant improvements to the Cavco operations.
Additionally, the combined network of plants will create
distribution improvement opportunities.
The transaction is expected to close in the
Company's third quarter of fiscal year 2022, subject to applicable
regulatory approvals and satisfaction of certain customary
conditions. TN Capital Advisors LLC (“True North”) acted as
exclusive financial advisor to Cavco for the transaction. Whelan
Advisory and Lincoln International acted as advisors to The
Commodore Corporation. Polsinelli served as legal advisor to Cavco.
Williams Parker served as legal advisor to The Commodore
Corporation.
Conference Call and Webcast Details
Cavco's management will hold a conference call and webcast to
discuss the transaction today, July 26, 2021, at 1:00 p.m.
(Eastern Time). Interested parties can access a live webcast of the
conference call on the Internet at https://investor.cavco.com or
via telephone at + 1 (844) 348-1686 (domestic) or + 1 (213)
358-0891 (international). An archive of the webcast and
presentation will be available for 60 days at
https://investor.cavco.com.
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 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 built primarily under the
Nationwide Homes brand. 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. Additional information about Cavco
can be found at www.cavco.com.
About Commodore
The Commodore Corporation and its different divisions have a
history dating from 1952. They are the largest independent
manufactured and modular homebuilder in the United States,
operating under a variety of brand names including Commodore Homes
of Pennsylvania, Commodore Homes of Indiana, Colony Homes,
MidCountry Homes, Pennwest Homes and R-Anell Homes. Additional
information about Commodore can be found at
www.commodorehomes.com.
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 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, including
such impacts from state and federal regulatory action that
restricts our ability to operate our business in the ordinary
course and impacts on (i) customer demand and the availability of
financing for our products, (ii) our supply chain and the
availability of raw materials for the manufacture of our products,
(iii) the availability of labor and the health and safety of our
workforce and (iv) our liquidity and access to the capital markets;
labor shortages and the pricing and availability of raw materials;
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; 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; a write-off of all or
part of our goodwill; our ability to maintain relationships with
independent distributors; our business and operations being
concentrated in certain geographic regions; governmental and
regulatory disruption, including federal government shutdowns;
curtailment of available financing from home-only lenders;
availability of wholesale financing and limited floor plan lenders;
market forces and housing demand fluctuations; the cyclical and
seasonal nature of our business; competition; general deterioration
in economic conditions and turmoil in the credit markets;
unfavorable zoning ordinances; extensive regulation affecting
manufactured housing; potential financial impact on the Company
from the subpoenas we received from the SEC and its ongoing
investigation, including the risk of potential litigation or
regulatory action, and costs and expenses arising from the SEC
subpoenas and investigation and the events described in or covered
by the SEC subpoenas and investigation, which include the Company's
indemnification obligations and insurance costs regarding such
matters, and potential reputational damage that the Company may
suffer; losses not covered by our director and officer insurance,
which may be large, adversely impacting financial performance; loss
of any of our executive officers; net losses were incurred in
certain prior periods and our ability to generate income in the
future; liquidity and ability to raise capital may be limited;
organizational document provisions delaying or making a change in
control more difficult; volatility of stock price; together with
all of the other risks described in our filings with the SEC.
Readers are specifically referred to the Risk Factors described in
Item 1A of the 2021 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 FuslerDirector of Financial Reporting and
Investor Relationsinvestor_relations@cavco.com |
|
Phone: 602-256-6263On the
Internet: www.cavco.com |
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