8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 23, 2019

Cavco Industries, Inc.

(Exact name of registrant as specified in its charter)

Delaware	000-08822	56-2405642
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

3636 North Central Avenue, Suite 1200,
Phoenix, Arizona 85012

(Address of principal executive offices, including zip code)

Registrant's telephone number, including area code: (602) 256-6263

Not applicable

(Former name or former address if changed from last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $0.01	CVCO	The Nasdaq Stock Market LLC (Nasdaq Global Select Market)

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02. Results of Operations and Financial Condition

On May 23, 2019, Cavco Industries, Inc., a Delaware corporation (the "Company"), announced financial results for its fiscal fourth quarter and year endedMarch 30, 2019. A copy of the Company’s press release announcing these financial results is attached as Exhibit 99.1 hereto and incorporated in this Item 2.02 by reference.

Item 9.01. Financial Statements and Exhibits

Exhibit Number	Description
99.1	Press Release dated May 23, 2019

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

CAVCO INDUSTRIES, INC.
By:	/s/ Daniel L. Urness
	Daniel L. Urness
	Executive Vice President, Chief Financial Officer and Treasurer
Date:	May 23, 2019

EXHIBIT INDEX

Exhibit Number	Description
99.1	Press Release dated May 23, 2019

EX-99.1

	For additional information, contact:
	Mark Fusler Director of Financial Reporting investor_relations@cavco.com
News Release	Phone: 602-256-6263 On the Internet: www.cavco.com

FOR IMMEDIATE RELEASE

CAVCO INDUSTRIES REPORTS FISCAL 2019FOURTH QUARTER AND YEAR END RESULTS

PHOENIX, May 23, 2019 (GLOBE NEWSWIRE) -- Cavco Industries, Inc. (Nasdaq: CVCO) today announced financial results for the fourth quarter and fiscal year endedMarch 30, 2019.

Three months ended March 30, 2019 compared to the three months ended March 31, 2018

• Net revenue was $241.1 million, down0.6% from $242.5 million in the prior year period. Net revenue for the three months ended March 30, 2019 includes subcontracted pass-through services of $6.2 million, which are now recognized on a gross basis rather than net of associated costs. Current period revenue was lower from reduced home sales volume, largely offset by price increases and product mix. In the prior year period, the Company recognized $14.8 million of home sales revenue from early commercial loan payoffs received under Cavco's wholesale lending programs, in addition to completion of disaster-relief units for the Federal Emergency Management Agency.

• Income before income taxes was $26.1 million, a 15.0%decrease from $30.7 million. During the period, the Company experienced higher gross profit margins from increased prices coupled with declining home production materials input costs. Additionally, gross profit margins were enhanced by improved earnings in the financial services segment. In the prior year quarter, the Company recognized $4.5 million of other income from gains realized on the sale of corporate investments.

During the current year quarterly period, items ancillary to our core operations had the following impact on the results (in millions). None of these items occurred in the prior year period.

		Three Months Ended March 30, 2019
Net revenue
	Unrealized gains on equity investments in the financial services segment	$	0.6
Selling, general and administrative expenses
	Legal and other expenses related to the Company's internal investigation and response to the Securities and Exchange Commission ("SEC") inquiry	(0.8		)
	Director and Officer ("D&O") insurance premium amortization	(2.1		)
Other income
	Unrealized gains on corporate equity investments	0.7

• Income tax expense was $6.1 million, resulting in an effective tax rate of 23.4% compared to $8.6 million and an effective tax rate of 27.9% in the prior year period.

• Net income was $20.0 million compared to $22.1 million, a 9.5%decrease. Diluted net income per share was $2.17 versus $2.40 for the comparable period last year.

Twelve months ended March 30, 2019 compared to the twelve months ended March 31, 2018

• Net revenue was $962.7 million, up 10.5% from $871.2 million in the prior year. Current year Net revenue includes subcontracted pass-through services of $24.9 million, which is recognized on a gross basis, rather than net of associated costs in the prior year presentation. The remaining increase was primarily from higher home selling prices and product mix.

• Income before income taxesincreased10.4% to $86.7 million as compared to $78.5 million. The improvement was from higher gross profit margins from home sales, as well as improved earnings in the financial services segment. In the prior year, the Company received a $3.4 million favorable dispute settlement resolution that reduced cost of sales and also recognized $4.5 million of other income from gains realized on the sale of corporate investments.

During the current year period, items ancillary to our core operations had the following impact on the results (in millions). None of these items occurred in the prior year.

		Year Ended March 30, 2019
Net revenue
	Unrealized gains on equity investments in the financial services segment	$	0.1
Selling, general and administrative expenses
	Legal and other expenses related to the Company's internal investigation and the response to SEC inquiry	(2.1		)
	D&O insurance premium amortization	(2.8		)
Other income
	Unrealized losses on corporate equity investments	(0.3		)

• Income tax expense was $18.1 million, an effective tax rate of 20.8%, compared to income tax expense of $17.0 million and an effective rate of 21.7% in the prior year. The current period benefited from the Tax Cuts and Jobs Act (the "Tax Act"), while the prior year benefited from the requisite revaluation of the net deferred income tax balance as a result of the Tax Act, whereby the Company recorded a net income tax benefit of $4.8 million.

• Net income was $68.6 million, up11.5% from net income of $61.5 million. Diluted net income per share was $7.40 versus $6.68 in the prior year.

Commenting on the results, Bill Boor, President and Chief Executive Officer said, "This quarter’s positive results, and our results for the year, demonstrate the underlying strength in our business. During the year, the Company was successful in executing on our core priorities, including more effectively matching home sales prices with input costs. These initiatives were further aided by reductions in certain commodity prices this quarter. In addition, our financial services segment experienced one of its most profitable quarters to date."

Mr. Boor continued, "We look forward to another great year in fiscal 2020. We continue to believe that the need for affordable housing is strong. We’ve got a great team here at Cavco and our Company is in a strong position to help address the need for affordable housing in this country. I'm very excited to have the opportunity to lead Cavco in that important work."

Cavco’s management will hold a conference call to review these results tomorrow, May 24, 2019, 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.

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: 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 and 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 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 contraction in the credit markets; increased costs of healthcare benefits for employees; governmental and regulatory disruption, including federal government shutdowns; information technology failures and data security breaches; extensive regulation affecting manufactured housing; potential financial impact on the Company from the subpoenas we received from the SEC; 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, including the Company's indemnification obligations and insurance costs regarding such matters; potential reputational damage that the Company may suffer as a result of the matters that are the subject of the subpoenas from the SEC, as well as the results of the investigation being carried out by the Audit Committee of the Board of Directors; 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)

	March 30, 2019			March 31, 2018
ASSETS	(Unaudited)
Current assets:
Cash and cash equivalents	$	187,370		$	186,766
Restricted cash, current	12,148			11,228
Accounts receivable, net	40,701			35,043
Short-term investments	12,620			11,866
Current portion of consumer loans receivable, net	30,058			31,096
Current portion of commercial loans receivable, net	15,234			5,481
Inventories	116,203			109,152
Assets held for sale	3,061			—
Prepaid expenses and other current assets	44,654			27,961
Total current assets	462,049			418,593
Restricted cash	351			1,264
Investments	32,137			33,573
Consumer loans receivable, net	56,727			63,855
Commercial loans receivable, net	27,772			11,120
Property, plant and equipment, net	63,484			63,355
Goodwill and other intangibles, net	82,696			83,020
Total assets	$	725,216		$	674,780
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	29,305		$	23,785
Accrued liabilities	125,181			126,500
Current portion of securitized financings and other	19,522			26,044
Total current liabilities	174,008			176,329
Securitized financings and other	14,618			33,768
Deferred income taxes	7,002			7,577
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; Outstanding 9,098,320 and 9,044,858 shares, respectively	91			90
Additional paid-in capital	249,447			246,197
Retained earnings	280,078			209,381
Accumulated other comprehensive income (loss)	(28		)	1,438
Total stockholders’ equity	529,588			457,106
Total liabilities and stockholders’ equity	$	725,216		$	674,780

CAVCO INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF INCOME

(Dollars in thousands, except per share amounts)

(Unaudited)

	Three Months Ended						Year Ended
	March 30, 2019			March 31, 2018			March 30, 2019			March 31, 2018
Net revenue	$	241,113		$	242,529		$	962,746		$	871,235
Cost of sales	185,320			188,225			757,040			690,555
Gross profit	55,793			54,304			205,706			180,680
Selling, general and administrative expenses	31,487			28,404			121,568			106,907
Income from operations	24,306			25,900			84,138			73,773
Interest expense	(608		)	(1,092		)	(3,444		)	(4,397		)
Other income, net	2,378			5,896			5,982			9,147
Income before income taxes	26,076			30,704			86,676			78,523
Income tax expense	(6,105		)	(8,564		)	(18,054		)	(17,021		)
Net income	$	19,971		$	22,140		$	68,622		$	61,502
Net income per share:
Basic	$	2.20		$	2.45		$	7.56		$	6.82
Diluted	$	2.17		$	2.40		$	7.40		$	6.68
Weighted average shares outstanding:
Basic	9,098,320			9,039,815			9,080,878			9,024,437
Diluted	9,219,015			9,240,296			9,268,737			9,201,706

CAVCO INDUSTRIES, INC.

OTHER OPERATING DATA

(Dollars in thousands)

(Unaudited)

	Three Months Ended				Year Ended
	March 30, 2019		March 31, 2018		March 30, 2019		March 31, 2018
Net revenue:
Factory-built housing	$	225,528	$	228,074	$	905,726	$	815,519
Financial services	15,585		14,455		57,020		55,716
Total net revenue	$	241,113	$	242,529	$	962,746	$	871,235
Capital expenditures	$	1,318	$	5,361	$	7,636	$	8,386
Depreciation	$	1,150	$	959	$	4,374	$	3,658
Amortization of other intangibles	$	80	$	92	$	324	$	368
Total factory-built homes sold	3,519		4,063		14,389		14,537

###