UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~October~~July 1, ~~2022~~2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 000-08822

CAVCO INDUSTRIES INC.

(Exact name of registrant as specified in its charter)

Delaware

56-2405642

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification No.)

3636 North Central Ave, Ste 1200

Phoenix

Arizona

85012

(Address of principal executive offices, including zip code)

(602) 256-6263

(Registrant's telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

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


Title of each class	Trading Symbol(s)	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 (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

☒

Accelerated Filer

☐

Non-accelerated Filer

☐

Smaller Reporting Company

☐

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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~October~~July 28, ~~2022, 8,909,339~~2023, 8,677,178 shares of the registrant's Common Stock, ~~$.01~~$0.01 par value, were outstanding.

CAVCO INDUSTRIES, INC.

FORM 10-Q

~~October~~July 1, ~~2022~~2023

TABLE OF CONTENTS


			Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of ~~October~~July 1, ~~2022~~2023 (unaudited) and April ~~2, 2022~~1, 2023			1
Consolidated Statements of Comprehensive Income (unaudited) for the three ~~and six~~ months ended ~~October~~July 1, ~~2022~~2023 and ~~October~~July 2, ~~2021~~2022			2
Consolidated Statements of Cash Flows (unaudited) for the ~~six~~three months ended ~~October~~July 1, ~~2022~~2023 and ~~October~~July 2, ~~2021~~2022			3
Notes to Consolidated Financial Statements (unaudited)			4
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			1918
Item 3. Quantitative and Qualitative Disclosures About Market Risk			2823
Item 4. Controls and Procedures			2824
PART II. OTHER INFORMATION
Item 1. Legal Proceedings			2925
Item 1A. Risk Factors			2925
Item 2. Unregistered Sales of Equity Securities, ~~and~~ Use of Proceeds and Issue r Purchases of Equity Securities			2925
Item 3. Not applicable
Item 4. Not applicable
Item 5. Other Information			2925
Item 6. Exhibits			2926
SIGNATURES			3027

Table of Contents

PART 1. FINANCIAL INFORMATION

Item 1. Financial Statements

CAVCO INDUSTRIES, INC.

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per share amounts)


		October 1, 2022		April 2, 2022			July 1, 2023		April 1, 2023
ASSETS	ASSETS	(Unaudited)				ASSETS	(Unaudited)
Current assets	Current assets					Current assets
Cash and cash equivalents	Cash and cash equivalents	$	333,249	$	244,150	Cash and cash equivalents	$	352,234	$	271,427
Restricted cash, current	Restricted cash, current	14,535		14,849		Restricted cash, current	13,560		11,728
Accounts receivable, net	Accounts receivable, net	96,614		96,052		Accounts receivable, net	84,877		89,347
Short-term investments	Short-term investments	16,367		20,086		Short-term investments	14,173		14,978
Current portion of consumer loans receivable, net	Current portion of consumer loans receivable, net	18,400		20,639		Current portion of consumer loans receivable, net	13,477		17,019
Current portion of commercial loans receivable, net	Current portion of commercial loans receivable, net	32,452		32,272		Current portion of commercial loans receivable, net	48,772		43,414
Current portion of commercial loans receivable from affiliates, net	Current portion of commercial loans receivable from affiliates, net	211		372		Current portion of commercial loans receivable from affiliates, net	1,491		640
Inventories	Inventories	233,965		243,971		Inventories	253,986		263,150
Prepaid expenses and other current assets	Prepaid expenses and other current assets	73,998		71,726		Prepaid expenses and other current assets	76,117		92,876
Total current assets	Total current assets	819,791		744,117		Total current assets	858,687		804,579
Restricted cash	Restricted cash	335		335		Restricted cash	585		335
Investments	Investments	38,323		34,933		Investments	17,967		18,639
Consumer loans receivable, net	Consumer loans receivable, net	28,570		29,245		Consumer loans receivable, net	25,891		27,129
Commercial loans receivable, net	Commercial loans receivable, net	41,420		33,708		Commercial loans receivable, net	51,612		53,890
Commercial loans receivable from affiliates, net	Commercial loans receivable from affiliates, net	2,022		2,214		Commercial loans receivable from affiliates, net	3,584		4,033
Property, plant and equipment, net	Property, plant and equipment, net	189,968		164,016		Property, plant and equipment, net	223,663		228,278
Goodwill	Goodwill	100,577		100,993		Goodwill	115,498		114,547
Other intangibles, net	Other intangibles, net	27,450		28,459		Other intangibles, net	29,398		29,790
Operating lease right-of-use assets	Operating lease right-of-use assets	16,210		16,952		Operating lease right-of-use assets	26,162		26,755
Total assets	Total assets	$	1,264,666	$	1,154,972	Total assets	$	1,353,047	$	1,307,975
LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND STOCKHOLDERS' EQUITY	LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND STOCKHOLDERS' EQUITY					LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND STOCKHOLDERS' EQUITY
Current liabilities	Current liabilities					Current liabilities
Accounts payable	Accounts payable	$	42,655	$	43,082	Accounts payable	$	28,634	$	30,730
Accrued expenses and other current liabilities	Accrued expenses and other current liabilities	263,396		251,088		Accrued expenses and other current liabilities	264,742		262,661
Total current liabilities	Total current liabilities	306,051		294,170		Total current liabilities	293,376		293,391
Operating lease liabilities	Operating lease liabilities	12,289		13,158		Operating lease liabilities	22,114		21,678
Other liabilities	Other liabilities	10,420		10,836		Other liabilities	7,909		7,820
Deferred income taxes	Deferred income taxes	6,048		5,528		Deferred income taxes	5,702		7,581
Redeemable noncontrolling interest	Redeemable noncontrolling interest	926		825		Redeemable noncontrolling interest	1,120		1,219
Stockholders' equity	Stockholders' equity					Stockholders' equity
Preferred stock, $0.01 par value; 1,000,000 shares authorized; No shares issued or outstanding	Preferred stock, $0.01 par value; 1,000,000 shares authorized; No shares issued or outstanding	—		—		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; Issued 9,314,152 and 9,292,278 shares, respectively		93		93
Treasury stock, at cost; 404,813 and 241,773 shares, respectively		(100,000)		(61,040)
Common stock, $0.01 par value; 40,000,000 shares authorized; Issued 9,347,220 and 9,337,125 shares, respectively						Common stock, $0.01 par value; 40,000,000 shares authorized; Issued 9,347,220 and 9,337,125 shares, respectively	93		93
Treasury stock, at cost; 671,801 shares						Treasury stock, at cost; 671,801 shares	(164,452)		(164,452)
Additional paid-in capital	Additional paid-in capital	267,183		263,049		Additional paid-in capital	272,175		271,950
Retained earnings	Retained earnings	762,474		628,756		Retained earnings	915,667		869,310
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(818)		(403)		Accumulated other comprehensive loss	(657)		(615)
Total stockholders' equity	Total stockholders' equity	928,932		830,455		Total stockholders' equity	1,022,826		976,286
Total liabilities, redeemable noncontrolling interest and stockholders' equity	Total liabilities, redeemable noncontrolling interest and stockholders' equity	$	1,264,666	$	1,154,972	Total liabilities, redeemable noncontrolling interest and stockholders' equity	$	1,353,047	$	1,307,975

See accompanying Notes to Consolidated Financial Statements

Table of Contents

CAVCO INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Dollars in thousands, except per share amounts)

(Unaudited)


		Three Months Ended				Six Months Ended					Three Months Ended
		October 1, 2022		October 2, 2021		October 1, 2022		October 2, 2021				July 1, 2023		July 2, 2022
Net revenue	Net revenue	$	577,392	$	359,543	$	1,165,730	$	689,965	Net revenue		$	475,875	$	588,338
Cost of sales	Cost of sales	419,793		269,615		863,407		526,024		Cost of sales		357,996		443,614
Gross profit	Gross profit	157,599		89,928		302,323		163,941		Gross profit		117,879		144,724
Selling, general and administrative expenses	Selling, general and administrative expenses	66,894		45,372		133,030		86,204		Selling, general and administrative expenses		61,680		66,136
Income from operations	Income from operations	90,705		44,556		169,293		77,737		Income from operations		56,199		78,588
Interest income										Interest income		4,618		1,314
Interest expense	Interest expense	(233)		(203)		(394)		(367)		Interest expense		(266)		(161)
Other income, net		2,339		4,668		3,222		7,129
Other income (expense), net										Other income (expense), net		126		(431)
Income before income taxes	Income before income taxes	92,811		49,021		172,121		84,499		Income before income taxes		60,677		79,310
Income tax expense	Income tax expense	(18,613)		(11,338)		(38,229)		(19,770)		Income tax expense		(14,266)		(19,616)
Net income	Net income	74,198		37,683		133,892		64,729		Net income		46,411		59,694
Less: net income attributable to redeemable noncontrolling interest	Less: net income attributable to redeemable noncontrolling interest	82		73		174		73		Less: net income attributable to redeemable noncontrolling interest		54		92
Net income attributable to Cavco common stockholders	Net income attributable to Cavco common stockholders	$	74,116	$	37,610	$	133,718	$	64,656	Net income attributable to Cavco common stockholders		$	46,357	$	59,602

Comprehensive income	Comprehensive income									Comprehensive income
Net income	Net income	$	74,198	$	37,683	$	133,892	$	64,729	Net income		$	46,411	$	59,694
Reclassification adjustment for securities sold	Reclassification adjustment for securities sold	(6)		—		(6)		1		Reclassification adjustment for securities sold		3		—
Applicable income taxes	Applicable income taxes	1		—		1		—		Applicable income taxes		(1)		—
Net change in unrealized position of investments held	Net change in unrealized position of investments held	(377)		(16)		(519)		(34)		Net change in unrealized position of investments held		(56)		(142)
Applicable income taxes	Applicable income taxes	79		3		109		7		Applicable income taxes		12		30
Comprehensive income	Comprehensive income	73,895		37,670		133,477		64,703		Comprehensive income		46,369		59,582
Less: comprehensive income attributable to redeemable noncontrolling interest	Less: comprehensive income attributable to redeemable noncontrolling interest	82		73		174		73		Less: comprehensive income attributable to redeemable noncontrolling interest		54		92
Comprehensive income attributable to Cavco common stockholders	Comprehensive income attributable to Cavco common stockholders	$	73,813	$	37,597	$	133,303	$	64,630	Comprehensive income attributable to Cavco common stockholders		$	46,315	$	59,490

Net income per share attributable to Cavco common stockholders	Net income per share attributable to Cavco common stockholders									Net income per share attributable to Cavco common stockholders
Basic	Basic	$	8.32	$	4.09	$	15.01	$	7.03	Basic		$	5.35	$	6.68
Diluted	Diluted	$	8.25	$	4.06	$	14.88	$	6.97	Diluted		$	5.29	$	6.63
Weighted average shares outstanding	Weighted average shares outstanding									Weighted average shares outstanding
Basic	Basic	8,903,703		9,190,866		8,910,933		9,194,577		Basic		8,670,434		8,918,280
Diluted	Diluted	8,978,997		9,273,136		8,983,425		9,274,440		Diluted		8,758,080		8,988,929

See accompanying Notes to Consolidated Financial Statements

Table of Contents

CAVCO INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)


		Six Months Ended					Three Months Ended
		October 1, 2022		October 2, 2021			July 1, 2023		July 2, 2022
OPERATING ACTIVITIES	OPERATING ACTIVITIES					OPERATING ACTIVITIES
Net income	Net income	$	133,892	$	64,729	Net income	$	46,411	$	59,694
Adjustments to reconcile net income to net cash provided by operating activities	Adjustments to reconcile net income to net cash provided by operating activities					Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	Depreciation and amortization	8,284		3,190		Depreciation and amortization	4,566		3,946
Provision for credit losses	Provision for credit losses	(263)		(74)		Provision for credit losses	19		(167)
Deferred income taxes	Deferred income taxes	630		1,987		Deferred income taxes	(1,868)		(2,442)
Stock-based compensation expense	Stock-based compensation expense	3,525		2,417		Stock-based compensation expense	1,438		1,425
Non-cash interest income, net	Non-cash interest income, net	(280)		(770)		Non-cash interest income, net	(297)		(257)
Gain on sale or retirement of property, plant and equipment, net		(25)		(41)
Loss (gain) on sale or retirement of property, plant and equipment, net						Loss (gain) on sale or retirement of property, plant and equipment, net	190		(232)
Gain on investments and sale of loans, net	Gain on investments and sale of loans, net	(3,303)		(12,555)		Gain on investments and sale of loans, net	(3,165)		(288)

Changes in operating assets and liabilities, net of acquisitions	Changes in operating assets and liabilities, net of acquisitions					Changes in operating assets and liabilities, net of acquisitions
Accounts receivable	Accounts receivable	(562)		(3,136)		Accounts receivable	3,692		(12,076)
Consumer loans receivable originated	Consumer loans receivable originated	(97,155)		(85,370)		Consumer loans receivable originated	(36,737)		(47,467)
Proceeds from sales of consumer loans		100,537		101,556
Proceeds from sales of consumer loans receivable						Proceeds from sales of consumer loans receivable	42,363		47,881
Principal payments received on consumer loans receivable	Principal payments received on consumer loans receivable	4,961		6,875		Principal payments received on consumer loans receivable	1,819		2,421
Inventories	Inventories	10,006		(19,980)		Inventories	9,110		(10,751)
Prepaid expenses and other current assets	Prepaid expenses and other current assets	(4,832)		993		Prepaid expenses and other current assets	15,151		7,359
Commercial loans receivable		(7,652)		3,331
Commercial loans receivable originated						Commercial loans receivable originated	(28,726)		(22,776)
Principal payments received on commercial loans receivable						Principal payments received on commercial loans receivable	25,216		18,981
Accounts payable and accrued expenses and other current liabilities	Accounts payable and accrued expenses and other current liabilities	15,179		16,935		Accounts payable and accrued expenses and other current liabilities	3,111		12,989
Net cash provided by operating activities	Net cash provided by operating activities	162,942		80,087		Net cash provided by operating activities	82,293		58,240
INVESTING ACTIVITIES	INVESTING ACTIVITIES					INVESTING ACTIVITIES
Purchases of property, plant and equipment	Purchases of property, plant and equipment	(33,188)		(4,671)		Purchases of property, plant and equipment	(4,183)		(25,007)
Payments for acquisitions, net		—		(151,309)

Proceeds from sale of property, plant and equipment	Proceeds from sale of property, plant and equipment	402		53		Proceeds from sale of property, plant and equipment	4,434		283
Purchases of investments	Purchases of investments	(9,742)		(6,251)		Purchases of investments	(1,710)		(4,228)
Proceeds from sale of investments	Proceeds from sale of investments	7,595		6,133		Proceeds from sale of investments	3,545		4,553
Net cash used in investing activities		(34,933)		(156,045)

Net cash provided (used) by investing activities						Net cash provided (used) by investing activities	2,086		(24,399)
FINANCING ACTIVITIES	FINANCING ACTIVITIES					FINANCING ACTIVITIES
Payments for taxes on stock option exercises and releases of equity awards	Payments for taxes on stock option exercises and releases of equity awards	(982)		(26)		Payments for taxes on stock option exercises and releases of equity awards	(1,363)		(848)
Proceeds from exercise of stock options	Proceeds from exercise of stock options	1,591		2,891		Proceeds from exercise of stock options	150		—

Payments on finance leases and other secured financings	Payments on finance leases and other secured financings	(393)		(1,122)		Payments on finance leases and other secured financings	(157)		(165)
Payments for common stock repurchases	Payments for common stock repurchases	(38,960)		(20,436)		Payments for common stock repurchases	—		(38,960)
Distributions to noncontrolling interest	Distributions to noncontrolling interest	(480)		(180)		Distributions to noncontrolling interest	(120)		(240)
Net cash used in financing activities	Net cash used in financing activities	(39,224)		(18,873)		Net cash used in financing activities	(1,490)		(40,213)
Net increase (decrease) in cash, cash equivalents and restricted cash	Net increase (decrease) in cash, cash equivalents and restricted cash	88,785		(94,831)		Net increase (decrease) in cash, cash equivalents and restricted cash	82,889		(6,372)
Cash, cash equivalents and restricted cash at beginning of the fiscal year	Cash, cash equivalents and restricted cash at beginning of the fiscal year	259,334		339,307		Cash, cash equivalents and restricted cash at beginning of the fiscal year	283,490		259,334
Cash, cash equivalents and restricted cash at end of the period	Cash, cash equivalents and restricted cash at end of the period	$	348,119	$	244,476	Cash, cash equivalents and restricted cash at end of the period	$	366,379	$	252,962
Supplemental disclosures of cash flow information	Supplemental disclosures of cash flow information					Supplemental disclosures of cash flow information
Cash paid for income taxes	Cash paid for income taxes	$	48,027	$	19,127	Cash paid for income taxes	$	8,123	$	18,486
Cash paid for interest	Cash paid for interest	$	142	$	195	Cash paid for interest	$	185	$	71
Supplemental disclosures of noncash activity	Supplemental disclosures of noncash activity					Supplemental disclosures of noncash activity
Change in GNMA loans eligible for repurchase	Change in GNMA loans eligible for repurchase	$	(3,286)	$	(8,830)	Change in GNMA loans eligible for repurchase	$	(1,873)	$	(2,620)
Right-of-use assets recognized and operating lease obligations incurred	Right-of-use assets recognized and operating lease obligations incurred	$	1,445	$	2,205	Right-of-use assets recognized and operating lease obligations incurred	$	687	$	1,159
Fair value of assets acquired under finance leases		$	—	$	7,398
Finance lease obligations incurred		$	—	$	6,043

See accompanying Notes to Consolidated Financial Statements

Table of Contents

CAVCO INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. Basis of Presentation

The accompanying unaudited Consolidated Financial Statements of Cavco Industries, Inc. and its subsidiaries (collectively, "we," "us," "our," the "Company" or "Cavco") have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC") for Quarterly Reports on Form 10-Q and Article 10 of SEC Regulation S-X. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles ("GAAP") have been condensed or omitted pursuant to such rules and regulations. In addition, references throughout to numbered "Notes" refer to these Notes to Consolidated Financial Statements, unless otherwise stated.

In the opinion of management, these financial statements include all adjustments, including normal recurring adjustments, that are necessary to fairly state the results for the periods presented. Certain prior period amounts have been reclassified including from ~~secured financings~~Other income (expense), net to ~~accrued expenses~~Interest income to conform to current period classification. We have evaluated subsequent events after the balance sheet date through the date of the filing of this report with the ~~SEC;~~SEC, and ~~except for the events set forth in Note 20 of the Notes to Consolidated Financial Statements ("Notes") of the Company's Quarterly Report on Form 10-Q for the period ended October 1, 2022,~~ there were no disclosable subsequent ~~events requiring disclosure.~~events. These Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and the Notes to the Consolidated Financial Statements included in our ~~2022~~2023 Annual Report on Form 10-K for the year ended April ~~2, 2022,~~1, 2023, filed with the SEC ("Form 10-K").

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and accompanying notes. Due to uncertainties, actual results could differ from the estimates and assumptions used in preparation of the Consolidated Financial Statements. The Consolidated Statements of Comprehensive Income and Consolidated Statements of Cash Flows for the interim periods are not necessarily indicative of the results or cash flows for the full year. The Company operates on a 52-53 week fiscal year ending on the Saturday nearest to March 31st of each year. Each fiscal quarter consists of 13 weeks, with an occasional fourth quarter extending to 14 weeks, if necessary, for the fiscal year to end on the Saturday nearest to March 31st. The current fiscal year will end on ~~April 1, 2023~~March 30, 2024 and will include 52 weeks.

We operate in two segments: (1) factory-built housing, which includes wholesale and retail factory-built housing operations, and (2) financial services, which includes manufactured housing consumer finance and insurance. We design and build a wide variety of affordable manufactured homes, modular homes and park model RVs through 2629 homebuilding production lines located throughout the United States ~~which are sold to~~and two production lines in Mexico. We distribute our homes through a large network of independent ~~distributors, community operators~~distribution points in 48 states and ~~residential developers~~Canada and ~~through our 42~~68 Company-owned U.S. retail ~~stores.~~stores, of which 41 are located in Texas. The financial services segment is comprised of a finance subsidiary, CountryPlace Acceptance Corp. ("CountryPlace"), and an insurance subsidiary, Standard Casualty Company ("Standard Casualty"). CountryPlace is an approved Federal National Mortgage Association ("~~Fannie~~'FNMA" or "Fannie Mae") and Federal Home Loan Mortgage Corporation ("~~Freddie~~FHLMC" or "Freddie Mac") seller/servicer and a Government National Mortgage Association ("~~Ginnie~~GNMA" or "Ginnie Mae") mortgage-backed securities issuer that offers conforming mortgages, non-conforming mortgages and home-only loans to purchasers of factory-built homes. Standard Casualty provides property and casualty insurance primarily to owners of manufactured homes.

During fiscal ~~2022,~~2023, we acquired an additional 20% ownership in Craftsman Homes, LLC and Craftsman Homes Development, LLC (collectively known as "Craftsman"), which gave us a controlling interest and therefore became a consolidated entity, and we purchased certain manufactured housing assets and assumed certain liabilitiescompleted the acquisition of ~~The Commodore Corporation ("Commodore"). Craftsman is a manufactured home retailer with four locations in Nevada selling Company~~Solitaire Inc. and other ~~manufacturer branded homes. Commodore added six~~related entities (collectively "Solitaire Homes"), including their four manufacturing facilities and ~~two wholly-owned~~twenty-two retail locations ~~and also participates~~by acquiring 100% of the outstanding stock of Solitaire Homes. The results of operations are included in ~~commercial lending operations with its dealers.~~our Consolidated Financial Statements from the date of acquisition. See Note 20.

In addition to the below, for a description of significant accounting policies we used in the preparation of our Consolidated Financial Statements, please refer to Note 1 of the Notes to Consolidated Financial Statements included in the Form 10-K.

Table of Contents

2. Revenue from Contracts with Customers

The following table summarizes ~~customer contract revenues~~Net revenue disaggregated by reportable segment and source (in thousands):


		Three Months Ended				Six Months Ended					Three Months Ended
		October 1, 2022		October 2, 2021		October 1, 2022		October 2, 2021				July 1, 2023		July 2, 2022
Factory-built housing	Factory-built housing									Factory-built housing
U.S. Housing and Urban Development code homes		$	496,763	$	285,947	$	1,003,946	$	548,337
Modular homes		37,236		31,386		71,574		58,003
Park model RVs		10,502		9,728		24,257		19,399
Other		15,101		15,033		32,422		28,638
Home sales										Home sales		$	439,744	$	555,276
Delivery, setup and other revenues										Delivery, setup and other revenues		17,365		17,321
		559,602		342,094		1,132,199		654,377				457,109		572,597
Financial services	Financial services									Financial services
Insurance agency commissions received from third-party insurance companies	Insurance agency commissions received from third-party insurance companies	1,029		850		2,426		1,723		Insurance agency commissions received from third-party insurance companies		899		1,397
All other sources	All other sources	16,761		16,599		31,105		33,865		All other sources		17,867		14,344
		17,790		17,449		33,531		35,588				18,766		15,741
		$	577,392	$	359,543	$	1,165,730	$	689,965			$	475,875	$	588,338

3. Restricted Cash

Restricted cash consisted of the following (in thousands):


		October 1, 2022		April 2, 2022			July 1, 2023		April 1, 2023
Cash related to CountryPlace customer payments to be remitted to third parties	Cash related to CountryPlace customer payments to be remitted to third parties	$	13,933	$	13,857	Cash related to CountryPlace customer payments to be remitted to third parties	$	12,883	$	11,123
Other restricted cash	Other restricted cash	937		1,327		Other restricted cash	1,262		940
		14,870		15,184			14,145		12,063
Current portion		(14,535)		(14,849)
Less current portion						Less current portion	(13,560)		(11,728)
		$	335	$	335		$	585	$	335

Corresponding amounts for customer payments to be remitted to third parties are recorded in Accounts payable.

The following table provides a reconciliation of Cash and cash equivalents and Restricted cash reported within the Consolidated Balance Sheets to the combined amounts shown in the Consolidated Statements of Cash Flows (in thousands):


		October 1, 2022		October 2, 2021			July 1, 2023		July 2, 2022
Cash and cash equivalents	Cash and cash equivalents	$	333,249	$	224,291	Cash and cash equivalents	$	352,234	$	238,072
Restricted cash	Restricted cash	14,870		20,185		Restricted cash	14,145		14,890
		$	348,119	$	244,476		$	366,379	$	252,962

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4. Investments

Investments consisted of the following (in thousands):


		October 1, 2022		April 2, 2022			July 1, 2023		April 1, 2023
Available-for-sale debt securities	Available-for-sale debt securities	$	19,488	$	17,760	Available-for-sale debt securities	$	17,292	$	18,555
Marketable equity securities	Marketable equity securities	14,441		16,780		Marketable equity securities	9,798		9,989
Non-marketable equity investments	Non-marketable equity investments	20,761		20,479		Non-marketable equity investments	5,050		5,073
		54,690		55,019			32,140		33,617
Less short-term investments	Less short-term investments	(16,367)		(20,086)		Less short-term investments	(14,173)		(14,978)
		$	38,323	$	34,933		$	17,967	$	18,639

Investments in marketable equity securities consist of investments in the common stock of industrial and other companies.

Our non-marketable equity investments include investments in community-based initiatives that buy and sell our homes and provide home-only financing to residents of certain manufactured home communities and other distribution operations.

We record investments in ~~manufactured housing distributors.~~fixed maturity securities classified as available-for-sale at fair value and record the difference between fair value and cost in Accumulated other comprehensive loss in the Consolidated Balance Sheets.

The amortized cost and fair value of our investments in available-for-sale debt securities, by security type are shown in the table below (in thousands):


		October 1, 2022				April 2, 2022					July 1, 2023				April 1, 2023
		Amortized Cost		Fair Value		Amortized Cost		Fair Value			Amortized Cost		Fair Value		Amortized Cost		Fair Value
Residential mortgage-backed securities	Residential mortgage-backed securities	$	3,161	$	3,059	$	1,668	$	1,613	Residential mortgage-backed securities	$	2,328	$	2,237	$	2,567	$	2,488
State and political subdivision debt securities	State and political subdivision debt securities	6,560		6,208		10,100		9,906		State and political subdivision debt securities	5,172		4,910		6,023		5,769
Corporate debt securities	Corporate debt securities	10,802		10,221		6,502		6,241		Corporate debt securities	10,623		10,145		10,745		10,298
		$	20,523	$	19,488	$	18,270	$	17,760		$	18,123	$	17,292	$	19,335	$	18,555

The amortized cost and fair value of our investments in available-for-sale debt securities, by contractual maturity, are shown in the table below (in thousands). Expected maturities differ from contractual maturities as borrowers may have the right to call or prepay obligations, with or without penalties.

October 1, 2022
Amortized
Cost Fair
Value
Due in less than one year $ 1,443 $ 1,423
Due after one year through five years 14,521 13,610
Due after five years through ten years 1,005 1,007
Due after ten years 393 389
Mortgage-backed securities 3,161 3,059
$ 20,523 $ 19,488

~~There were no gross gains or losses realized on the sale of available-for-sale debt securities during the three and six months ended October 1, 2022 or October 2, 2021.~~


	July 1, 2023
	Amortized Cost		Fair Value
Due in less than one year	$	3,590	$	3,510
Due after one year through five years	11,565		10,906
Due after five years through ten years	250		250
Due after ten years	390		389
Mortgage-backed securities	2,328		2,237
	$	18,123	$	17,292

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Net investment gains and losses on marketable equity securities were as follows (in thousands):

Three Months Ended Six Months Ended
October 1,
2022 October 2,
2021 October 1,
2022 October 2,
2021
Marketable equity securities
Net (loss) gain recognized during the period $ (233) $ 243 $ (2,575) $ 1,939
Less: Net loss (gain) recognized on securities sold during the period 216 (143) 290 (279)
Unrealized (loss) gain recognized during the period on securities still held $ (17) $ 100 $ (2,285) $ 1,660


	Three Months Ended
		July 1, 2023		July 2, 2022
Marketable equity securities
Net gain (loss) recognized during the period		$	460	$	(2,342)
Less: Net (gain) loss recognized on securities sold during the period		(20)		74
Unrealized gain (loss) recognized during the period on securities still held		$	440	$	(2,268)

5. Inventories

Inventories consisted of the following (in thousands):


		October 1, 2022		April 2, 2022			July 1, 2023		April 1, 2023
Raw materials	Raw materials	$	93,358	$	95,929	Raw materials	$	85,289	$	92,045
Work in process	Work in process	29,600		30,638		Work in process	29,087		29,022
Finished goods	Finished goods	111,007		117,404		Finished goods	139,610		142,083
		$	233,965	$	243,971		$	253,986	$	263,150

6. Consumer Loans Receivable

The following table summarizes consumer loans receivable (in thousands):

October 1,
2022 April 2,
2022
Loans held for investment, previously securitized $ 23,241 $ 26,014
Loans held for investment 14,213 14,771
Loans held for sale 11,035 8,500
Construction advances 993 3,547
49,482 52,832
Deferred financing fees and other, net (773) (833)
Allowance for loan losses (1,739) (2,115)
46,970 49,884
Less current portion (18,400) (20,639)
$ 28,570 $ 29,245

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	July 1, 2023		April 1, 2023
Loans held for investment, previously securitized	$	20,055	$	21,000
Loans held for investment	12,880		13,117
Loans held for sale	7,599		10,846
Construction advances	376		706
	40,910		45,669
Deferred financing fees and other, net	(398)		(368)
Allowance for loan losses	(1,144)		(1,153)
	39,368		44,148
Less current portion	(13,477)		(17,019)
	$	25,891	$	27,129

The following table represents changes in the estimated allowance for loan losses, including related additions and deductions to the allowance for loan losses (in thousands):


		Three Months Ended				Six Months Ended					Three Months Ended
		October 1, 2022		October 2, 2021		October 1, 2022		October 2, 2021				July 1, 2023		July 2, 2022
Allowance for loan losses at beginning of period	Allowance for loan losses at beginning of period	$	1,905	$	2,918	$	2,115	$	3,188	Allowance for loan losses at beginning of period		$	1,153	$	2,115
Change in estimated loan losses, net	Change in estimated loan losses, net	(166)		210		(376)		(57)		Change in estimated loan losses, net		(9)		(210)
Charge-offs	Charge-offs	—		(329)		(19)		(332)		Charge-offs		—		(19)
Recoveries	Recoveries	—		—		19		—		Recoveries		—		19
Allowance for loan losses at end of period	Allowance for loan losses at end of period	$	1,739	$	2,799	$	1,739	$	2,799	Allowance for loan losses at end of period		$	1,144	$	1,905

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The consumer loans held for investment had the following characteristics:


		October 1, 2022		April 2, 2022			July 1, 2023		April 1, 2023
Weighted average contractual interest rate	Weighted average contractual interest rate	8.3	%	8.3	%	Weighted average contractual interest rate	8.1	%	8.2	%
Weighted average effective interest rate	Weighted average effective interest rate	9.0	%	9.2	%	Weighted average effective interest rate	9.6	%	8.8	%
Weighted average months to maturity	Weighted average months to maturity	150		151		Weighted average months to maturity	153		150

The following table is a consolidated summary of the delinquency status of the outstanding amortized cost of consumer loans receivable (in thousands):


		October 1, 2022		April 2, 2022			July 1, 2023		April 1, 2023
Current	Current	$	47,539	$	49,546	Current	$	38,722	$	43,252
31 to 60 days	31 to 60 days	336		1,202		31 to 60 days	1,040		1,247
61 to 90 days	61 to 90 days	361		41		61 to 90 days	77		213
91+ days	91+ days	1,246		2,043		91+ days	1,071		957
		$	49,482	$	52,832		$	40,910	$	45,669

The following ~~tables disaggregate the principal value of~~table disaggregates gross consumer loans receivable by credit quality indicator and fiscal year of origination (in thousands):


		October 1, 2022															July 1, 2023
		2023		2022		2021		2020		2019		Prior		Total			2024		2023		2022		2021		2020		Prior		Total
Prime- FICO score 680 and greater	Prime- FICO score 680 and greater	$	8,596	$	1,624	$	1,064	$	2,411	$	1,265	$	19,014	$	33,974	Prime- FICO score 680 and greater	$	5,378	$	1,440	$	183	$	996	$	1,963	$	16,864	$	26,824
Near Prime- FICO score 620-679	Near Prime- FICO score 620-679	1,049		153		1,022		1,135		1,615		9,116		14,090		Near Prime- FICO score 620-679	694		265		—		1,008		1,087		9,680		12,734
Sub-Prime- FICO score less than 620	Sub-Prime- FICO score less than 620	—		—		20		52		—		1,173		1,245		Sub-Prime- FICO score less than 620	—		—		—		19		50		938		1,007
No FICO score	No FICO score	—		—		—		16		25		132		173		No FICO score	—		—		—		—		—		345		345
		$	9,645	$	1,777	$	2,106	$	3,614	$	2,905	$	29,435	$	49,482		$	6,072	$	1,705	$	183	$	2,023	$	3,100	$	27,827	$	40,910

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		April 2, 2022															April 1, 2023
		2022		2021		2020		2019		2018		Prior		Total			2023		2022		2021		2020		2019		Prior		Total
Prime- FICO score 680 and greater	Prime- FICO score 680 and greater	$	8,155	$	1,615	$	2,371	$	1,339	$	853	$	20,485	$	34,818	Prime- FICO score 680 and greater	$	9,471	$	185	$	1,051	$	1,982	$	1,191	$	16,601	$	30,481
Near Prime- FICO score 620-679	Near Prime- FICO score 620-679	1,661		1,274		1,413		1,976		617		9,266		16,207		Near Prime- FICO score 620-679	1,695		—		1,012		1,131		1,550		8,244		13,632
Sub-Prime- FICO score less than 620	Sub-Prime- FICO score less than 620	45		20		52		—		—		1,318		1,435		Sub-Prime- FICO score less than 620	84		—		19		51		—		1,033		1,187
No FICO score	No FICO score	—		—		—		26		—		346		372		No FICO score	—		—		—		—		24		345		369
		$	9,861	$	2,909	$	3,836	$	3,341	$	1,470	$	31,415	$	52,832		$	11,250	$	185	$	2,082	$	3,164	$	2,765	$	26,223	$	45,669

As of ~~October~~July 1, ~~2022 and April 2, 2022, 43% and~~2023, 39% of the outstanding principal balance of the consumer loans receivable portfolio was concentrated in Texas ~~respectively,~~ and ~~16%~~15% was concentrated in Florida. As of April 1, 2023, 44% of the outstanding principal balance of the consumer loans receivable portfolio was concentrated in Texas and ~~17%, respectively~~13% was concentrated in Florida. Other than Texas and Florida, no state had concentrations in excess of 10% of the outstanding principal balance of the consumer loans receivable as of ~~October~~July 1, ~~2022~~2023 or April ~~2, 2022.~~1, 2023.

Repossessed homes totaled approximately ~~$375,000 and $499,000~~$1.1 million as of ~~October~~both July 1, ~~2022~~2023 and April ~~2, 2022, respectively,~~1, 2023 and are included in Prepaid expenses and other current assets onin the Consolidated Balance Sheets. Foreclosure or similar proceedings in progress totaled approximately ~~$605,000~~$0.6 million and $~~1.1~~0.5 million as of ~~October~~July 1, ~~2022~~2023 and April ~~2, 2022,~~1, 2023, respectively.

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7. Commercial Loans Receivable

The commercial loans receivable balance consists of direct financing arrangements for the home product needs of our independent distributors, community ~~operators~~owners and ~~residential~~ developers.

Commercial loans receivable, ~~(including from affiliates),~~ net consisted of the following (in thousands):


		October 1, 2022		April 2, 2022			July 1, 2023		April 1, 2023
Loans receivable	Loans receivable	$	77,345	$	69,693	Loans receivable	$	107,246	$	103,726
Allowance for loan losses	Allowance for loan losses	(1,123)		(1,011)		Allowance for loan losses	(1,614)		(1,586)
Deferred financing fees, net	Deferred financing fees, net	(117)		(116)		Deferred financing fees, net	(173)		(163)
		76,105		68,566			105,459		101,977
Less current portion		(32,663)		(32,644)
Less current portion of commercial loans receivable (including from affiliates), net						Less current portion of commercial loans receivable (including from affiliates), net	(50,263)		(44,054)
		$	43,442	$	35,922		$	55,196	$	57,923

The commercial loans receivable balance had the following characteristics:

October 1,
2022 April 2,
2022
Weighted average contractual interest rate 6.1 % 6.4 %
Weighted average months outstanding 9 9

~~Table of Contents~~


	July 1, 2023		April 1, 2023
Weighted average contractual interest rate	7.5	%	7.6	%
Weighted average months outstanding	10		9

The following table represents changes in the estimated allowance for loan losses (in thousands):


		Three Months Ended				Six Months Ended					Three Months Ended
		October 1, 2022		October 2, 2021		October 1, 2022		October 2, 2021				July 1, 2023		July 2, 2022
Balance at beginning of period	Balance at beginning of period	$	1,054	$	785	$	1,011	$	816	Balance at beginning of period		$	1,586	$	1,011
Change in estimated loan losses, net	Change in estimated loan losses, net	69		41		112		10		Change in estimated loan losses, net		28		43
Balance at end of period	Balance at end of period	$	1,123	$	826	$	1,123	$	826	Balance at end of period		$	1,614	$	1,054

Loans with indicators of potential performance problems are placed on watch list status and are subject to additional monitoring and scrutiny. Nonperforming status includes loans accounted for on a non-accrual basis and accruing loans with principal payments 90 days or more past due. As of ~~October~~July 1, ~~2022~~2023 and April ~~2, 2022,~~1, 2023, there were no commercial loans considered watch list or nonperforming. The following table disaggregates ~~the principal value of~~ our commercial loans receivable by credit quality indicator and fiscal year of origination (in thousands):

October 1, 2022
2023 2022 2021 2020 2019 Prior Total
Performing $ 43,323 $ 23,047 $ 6,698 $ 2,561 $ 815 $ 901 $ 77,345


	July 1, 2023
	2024		2023		2022		2021		2020		Prior		Total
Performing	$	26,639	$	63,412	$	10,907	$	3,268	$	2,015	$	1,005	$	107,246

April 2, 2022
2022 2021 2020 2019 2018 Prior Total
Performing $ 52,592 $ 10,181 $ 4,031 $ 1,391 $ 1,498 $ — $ 69,693


	April 1, 2023
	2023		2022		2021		2020		2019		Prior		Total
Performing	$	80,193	$	16,028	$	4,071	$	2,203	$	1,231	$	—	$	103,726

As of ~~October~~July 1, ~~2022,~~2023, there were no commercial loans 90 days or more past due that were still accruing interest, and we were not aware of any potential problem loans that would have a material effect on the commercial loans receivable balance.

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As of ~~October~~July 1, ~~2022~~2023 and April ~~2, 2022,~~1, 2023, we had concentrations of our outstanding principal balance of the commercial loans receivable balance in New York of ~~19%~~17% and ~~25%~~18%, respectively. No other state had concentrations in excess of 10% of the outstanding principal balance of the commercial loans receivable as of ~~October~~July 1, ~~2022~~2023 or April ~~2, 2022.~~1, 2023.

As of ~~October~~July 1, ~~2022~~2023 and April ~~2, 2022,~~1, 2023, one independent third-party and its affiliates comprised 13% and ~~14%~~12%, respectively, of the net commercial loans receivable principal balance outstanding, all of which was secured.

8. Property, Plant and Equipment, net

Property, plant and equipment, net, consisted of the following (in thousands):


		October 1, 2022		April 2, 2022			July 1, 2023		April 1, 2023
Property, plant and equipment, at cost	Property, plant and equipment, at cost					Property, plant and equipment, at cost
Land	Land	$	34,777	$	32,154	Land	$	39,823	$	39,822
Buildings and improvements	Buildings and improvements	142,890		100,775		Buildings and improvements	168,091		167,291
Machinery and equipment	Machinery and equipment	56,601		48,638		Machinery and equipment	73,733		76,826
Construction in progress	Construction in progress	12,474		29,281		Construction in progress	7,136		5,472
		246,742		210,848			288,783		289,411
Accumulated depreciation	Accumulated depreciation	(56,774)		(46,832)		Accumulated depreciation	(65,120)		(61,133)
		$	189,968	$	164,016		$	223,663	$	228,278

Depreciation expense for the three ~~and six~~ months ended ~~October~~July 1, 2023 and July 2, 2022 was ~~$3.8~~$4.2 million and ~~$7.3 million, respectively. Depreciation expense for the three and six months ended October 2, 2021 was $1.4 million and $2.9~~$3.4 million, respectively.

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9. Goodwill and Other Intangibles

Goodwill and other intangibles, net, consisted of the following (in thousands):


		October 1, 2022						April 2, 2022							July 1, 2023						April 1, 2023
		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount			Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Indefinite-lived	Indefinite-lived													Indefinite-lived
Goodwill	Goodwill	$	100,577	$	—	$	100,577	$	100,993	$	—	$	100,993	Goodwill	$	115,498	$	—	$	115,498	$	114,547	$	—	$	114,547
Trademarks and trade names	Trademarks and trade names	15,680		—		15,680		15,680		—		15,680		Trademarks and trade names	16,980		—		16,980		16,980		—		16,980
State insurance licenses	State insurance licenses	1,100		—		1,100		1,100		—		1,100		State insurance licenses	1,100		—		1,100		1,100		—		1,100
		117,357		—		117,357		117,773		—		117,773			133,578		—		133,578		132,627		—		132,627
Finite-lived	Finite-lived													Finite-lived
Customer relationships	Customer relationships	19,500		(9,334)		10,166		19,500		(8,392)		11,108		Customer relationships	15,000		(4,267)		10,733		16,900		(5,818)		11,082
Other	Other	1,924		(1,420)		504		1,924		(1,353)		571		Other	1,114		(529)		585		1,114		(486)		628
		$	138,781	$	(10,754)	$	128,027	$	139,197	$	(9,745)	$	129,452		$	149,692	$	(4,796)	$	144,896	$	150,641	$	(6,304)	$	144,337

During the three months ended July 1, 2023, fair value adjustments were made to certain assets and liabilities of Solitaire Homes in connection with purchase accounting measurement period adjustments. This resulted in additional Goodwill of $1.0 million. See Note 20.

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Amortization expense recognized on intangible assets ~~was $502,000 and $1.0 million~~ for the three ~~and six~~ months ended ~~October~~July 1, 2023 and July 2, 2022 was $0.4 million and $0.5 million, respectively. ~~Amortization expense recognized on intangible assets was $166,000~~Customer relationships have a weighted average remaining life of 7.6 years and ~~$339,000 for the three and six months ended October 2, 2021, respectively.~~other finite lived intangibles have a weighted average remaining life of 3.3 years.

Expected amortization for future fiscal years is as follows (in thousands):
Remainder of fiscal year $ 1,003
2024 1,339
2025 1,300
2026 1,258
2027 1,185
2028 1,079
Thereafter 3,506

During the second fiscal quarter, we finalized the purchase price allocation related to the Commodore acquisition, and recorded purchase accounting adjustments that did not have a material effect on the Consolidated Financial Statements.


Remainder of fiscal year 2024	$	1,177
2025	1,530
2026	1,488
2027	1,415
2028	1,299
2029	1,265
Thereafter	3,144
	$	11,318

10. Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following (in thousands):


		October 1, 2022		April 2, 2022			July 1, 2023		April 1, 2023
Customer deposits						Customer deposits	$	46,122	$	45,193
Salaries, wages and benefits	Salaries, wages and benefits	$	55,232	$	54,172	Salaries, wages and benefits	45,998		47,100
Customer deposits		48,255		56,318
Estimated warranties	Estimated warranties	30,841		26,250		Estimated warranties	32,401		31,368
Unearned insurance premiums	Unearned insurance premiums	26,453		24,917		Unearned insurance premiums	29,835		27,901
Accrued volume rebates	Accrued volume rebates	24,897		18,641		Accrued volume rebates	23,943		22,858

Other	Other	77,718		70,790		Other	86,443		88,241
		$	263,396	$	251,088		$	264,742	$	262,661

11. Warranties

Activity in the liability for estimated warranties was as follows (in thousands):


	Three Months Ended
		July 1, 2023		July 2, 2022
Balance at beginning of period		$	31,368	$	26,250

Charged to costs and expenses		13,409		15,004
Payments and deductions		(12,376)		(12,452)
Balance at end of period		$	32,401	$	28,802

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~~11. Warranties~~

~~Activity in the liability for estimated warranties was as follows (in thousands):~~

Three Months Ended Six Months Ended
October 1,
2022 October 2,
2021 October 1,
2022 October 2,
2021
Balance at beginning of period $ 28,802 $ 19,344 $ 26,250 $ 18,032
Purchase accounting additions — 6,928 — 6,928
Charged to costs and expenses 13,623 7,994 28,627 17,119
Payments and deductions (11,584) (8,521) (24,036) (16,334)
Balance at end of period $ 30,841 $ 25,745 $ 30,841 $ 25,745

12. Other Liabilities

The following table summarizes ~~the non-current portion of our~~secured financings and other ~~liabilities~~obligations (in thousands):


		October 1, 2022		April 2, 2022			July 1, 2023		April 1, 2023
Finance lease payables	Finance lease payables	$	6,280	$	6,316	Finance lease payables	$	6,224	$	6,243
Other secured financing	Other secured financing	2,585		2,933		Other secured financing	2,184		2,379
Mandatorily redeemable noncontrolling interest	Mandatorily redeemable noncontrolling interest	2,290		2,371		Mandatorily redeemable noncontrolling interest	2,300		2,268
		11,155		11,620			10,708		10,890
Less current portion included in Accrued expenses and other current liabilities	Less current portion included in Accrued expenses and other current liabilities	(735)		(784)		Less current portion included in Accrued expenses and other current liabilities	(2,799)		(3,070)
		$	10,420	$	10,836		$	7,909	$	7,820

13. Debt

We are party to a Credit Agreement that expires in 2027 with Bank of America, N.A., providing for a $50 million revolving credit facility (the "Revolving Credit Facility"), which may be increased up to an aggregate amount of $100 million. Borrowings under the Revolving Credit Facility generally bear interest at the Secured Overnight Financing Rate plus a credit spread and a margin based on our Consolidated Total Leverage Ratio.

As of July 1, 2023 and April 1, 2023, there were no borrowings outstanding under the Revolving Credit Facility and we were in compliance with all covenants.

14. Reinsurance and Insurance Loss Reserves

Certain of Standard Casualty's premiums and benefits are assumed from and ceded to other insurance companies under various reinsurance agreements. We remain obligated for amounts ceded in the event that the reinsurers do not meet their obligations.

The effects of reinsurance on premiums written and earned were as follows (in thousands):

Three Months Ended
October 1, 2022 October 2, 2021
Written Earned Written Earned
Direct premiums $ 7,168 $ 7,338 $ 6,310 $ 6,323
Assumed premiums—nonaffiliated 8,818 8,211 8,240 7,630
Ceded premiums—nonaffiliated (4,414) (4,414) (3,714) (3,714)

$ 11,572 $ 11,135 $ 10,836 $ 10,239
Six Months Ended
October 1, 2022 October 2, 2021
Written Earned Written Earned
Direct premiums $ 14,896 $ 14,388 $ 13,149 $ 12,319
Assumed premiums—nonaffiliated 17,846 16,168 16,814 15,008
Ceded premiums—nonaffiliated (8,643) (8,643) (7,361) (7,361)

$ 24,099 $ 21,913 $ 22,602 $ 19,966










	Three Months Ended
	July 1, 2023				July 2, 2022
	Written		Earned		Written		Earned
Direct premiums	$	10,379	$	8,676	$	7,728	$	7,050
Assumed premiums—nonaffiliated	9,800		8,570		9,028		7,957
Ceded premiums—nonaffiliated	(6,127)		(6,127)		(4,229)		(4,229)
	$	14,052	$	11,119	$	12,527	$	10,778

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Typical insurance policies written or assumed have a maximum coverage of ~~$300,000~~$0.4 million per claim, of which we cede ~~$125,000~~$0.2 million of the risk of loss per reinsurance. Therefore, our risk of loss is limited to ~~$175,000~~$0.2 million per claim on typical policies, subject to the reinsurers meeting their obligations. After this limit, amounts are recoverable through reinsurance for catastrophic losses in excess of $2$3.0 million per occurrence, up to a maximum of ~~$70~~$100 million in the aggregate for that occurrence.

Standard Casualty establishes reserves for claims and claims expense on reported and incurred but not reported ("IBNR") claims of non-reinsured losses. Reserves for claims are included in the Accrued expenses and other current liabilities line item on the Consolidated Balance Sheets and claims expenses are recorded in Cost of sales on the Consolidated Statements of Comprehensive Income. The following details the activity in the reserve for the ~~six~~three months ended ~~October~~July 1, ~~2022~~2023 and ~~October~~July 2, ~~2021~~2022 (in thousands):


		Three Months Ended				Six Months Ended					Three Months Ended
		October 1, 2022		October 2, 2021		October 1, 2022		October 2, 2021				July 1, 2023		July 2, 2022
Balance at beginning of period	Balance at beginning of period	$	8,574	$	8,348	$	8,149	$	7,451	Balance at beginning of period		$	10,939	$	8,149
Net incurred losses during the period	Net incurred losses during the period	7,809		7,282		16,586		15,257		Net incurred losses during the period		11,077		8,777
Net claim payments during the period	Net claim payments during the period	(8,593)		(8,280)		(16,945)		(15,358)		Net claim payments during the period		(9,015)		(8,352)
Balance at end of period	Balance at end of period	$	7,790	$	7,350	$	7,790	$	7,350	Balance at end of period		$	13,001	$	8,574

~~14.~~15. Commitments and Contingencies

Repurchase Contingencies. We are contingently liable under terms of repurchase agreements with financial institutions providing inventory financing to independent distributors of our products. These arrangements, which are customary in the industry, provide for the repurchase of products sold to distributors in the event of default by the distributor.

The maximum amount for which the Company was liable under ~~such~~the terms of repurchase agreements with financial institutions that provide inventory financing to independent distributors of our products approximated ~~$189.4~~$157 million and ~~$141.0~~$178 million at ~~October~~July 1, ~~2022~~2023 and April ~~2, 2022,~~1, 2023, respectively, without reduction for the resale value of the homes. We ~~had a~~ During the fourth quarter of fiscal 2023, we received one repurchase demand notice and the inventory was acquired during the current quarter. Our reserve for repurchase commitments, ~~of $5.0~~recorded in Accrued expenses and other current liabilities, was $3.9 million at ~~October~~July 1, ~~2022~~2023 and ~~$3.6~~$5.2 million at April ~~2, 2022, and there were no repurchases during either period.~~1, 2023.

Construction-Period Mortgages. We fund construction-period mortgages through periodic advances during home construction. At the time of initial funding, we commit to fully fund the loan contract in accordance with a predetermined schedule. The total loan contract amount, less cumulative advances, represents an off-balance sheet contingent commitment to fund future advances.

Loan contracts with off-balance sheet commitments are summarized below (in thousands):


		October 1, 2022		April 2, 2022			July 1, 2023		April 1, 2023
Construction loan contract amount	Construction loan contract amount	$	3,397	$	9,330	Construction loan contract amount	$	1,594	$	2,214
Cumulative advances	Cumulative advances	(993)		(3,547)		Cumulative advances	(376)		(706)
		$	2,404	$	5,783		$	1,218	$	1,508

Representations and Warranties of Mortgages Sold. We sell loans to Government-Sponsored Enterprises ("GSEs") and whole-loan purchasers. In connection with these activities, we provide to GSEs and whole-loan purchasers and lenders representations and warranties related to the loans sold or financed.The ~~Upon a breach of a representation, we may be required to repurchase the loan or to indemnify a party for incurred losses. We maintain a~~ reserve for ~~these~~ contingent ~~repurchase~~repurchases and indemnification obliga~~tions. This reserve of $816,000~~tions was $0.7 million as of ~~October~~July 1, ~~2022~~2023 and ~~$866,000 as of~~ April ~~2, 2022,~~1, 2023, included in Accrued expenses and other current liabilities on the Consolidated Balance ~~Sheets, reflects management's estimate of probable loss.~~Sheets. There were no claim requests that resulted in the repurchase of ~~a loan~~any loans during the ~~six~~three months ended ~~October~~July 1, ~~2022.~~2023.

Interest Rate Lock Commitments. As of July 1, 2023, we had outstanding IRLCs with a notional amount of $31.1 million. For the three months ended July 1, 2023 and July 2, 2022, we recognized insignificant non-cash gains on outstanding IRLCs.

Forward Sales Commitments. As of July 1, 2023, we had $1.1 million in outstanding forward sales commitments ("Commitments"). During the three months ended July 1, 2023, we recognized an insignificant gain and during the three months ended July 2, 2022, we recognized a non-cash loss of $0.3 million relating to our Commitments.

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~~Interest Rate Lock Commitments~~. In originating loans for sale, we issue interest rate lock commitments ("IRLCs") to prospective borrowers. These IRLCs bind us to fund the approved loan at the specified rate regardless of whether interest rates or market prices for similar loans have changed between the commitment date and the closing date. As of October 1, 2022, we had outstanding IRLCs with a notional amount of $37.0 million. For the three months ended October 1, 2022 and October 2, 2021, we recognized losses of $9,000 and $5,000 ~~respectively on outstanding IRLCs.~~ ~~For the~~ ~~six months ended~~ ~~October 1, 2022 and October 2, 2021, we recognized gains of $31,000 and $42,000, respectively.~~

~~Forward Sales Commitments~~. We manage the risk profiles of a portion of the outstanding IRLCs and mortgage loans held for sale by entering into forward sales of mortgage-backed securities ("MBS") and whole loan sale commitments (collectively "Commitments"). As of October 1, 2022, we had $6.6 million in outstanding Commitments. We recognized non-cash gains ~~of $178,000 and $79,000 in the~~ ~~second quarter of fiscal~~ ~~2023~~ ~~and~~ ~~2022, respectively. During the~~ ~~six months ended~~ ~~October 1, 2022 and October 2, 2021, we recognized losses of $84,000 and $268,000, respectively.~~

Legal Matters. On September 2, 2021, the SEC filed a civil complaint in the United States District Court, District of Arizona, naming the Company along with the Company's former Chairman, President & Chief Executive Officer ("former CEO") and the Company's former Chief Financial Officer, alleging violations of the antifraud and internal accounting control provisions of the Securities Exchange Act of 1934 (the "Exchange Act") based on trading in the shares of another company directed by the former CEO that resulted in an unrealized gain of approximately $265,000. In the prior year, the Company recorded an accrual relating to this loss contingency. On September 23, 2022, the United States District Court for the District of Arizona approved the settlement of the SEC action against the Company. Without admitting or denying the findings of the consent judgment, the Company agreed to the imposition of an injunction against future violations of the antifraud and internal accounting control provisions of the Exchange Act and a monetary penalty of $1.5 million, which did not have a material impact on the Company's financial statements. The settlement resolves all claims in such action against the Company.

We are party to certain ~~other~~ lawsuits in the ordinary course of business. Based on management's present knowledge of the facts and (in certain cases) advice of outside counsel, management does not believe that loss contingencies arising from pending matters are likely to have a material adverse effect on our consolidated financial position, liquidity or results of operations after taking into account any existing reserves, which reserves are included in Accrued expenses and other current liabilities on the Consolidated Balance Sheets. However, future events or circumstances that may currently be unknown to management will determine whether the resolution of pending or threatened litigation or claims will ultimately have a material effect on our consolidated financial position, liquidity or results of operations in any future reporting periods.

~~Table of Contents~~

~~15.~~16. Stockholders' Equity and Redeemable Noncontrolling Interest

The following table represents changes in stockholders' equity attributable to Cavco's stockholders and redeemable noncontrolling interest during the ~~six~~three months ended ~~October~~July 1, ~~2022~~2023 (dollars in thousands):

Equity Attributable to Cavco Stockholders
Treasury Stock Additional paid-in capital Retained earnings Accumulated other comprehensive loss Total Redeemable Noncontrolling Interest
Common Stock
Shares Amount
Balance, April 2, 2022 9,292,278 $ 93 $ (61,040) $ 263,049 $ 628,756 $ (403) $ 830,455 $ 825
Net income — — — — 59,602 — 59,602 92
Other comprehensive loss, net — — — — — (112) (112) —
Issuance of common stock under stock incentive plans, net 5,957 — — (848) — — (848) —
Stock-based compensation — — — 1,425 — — 1,425 —
Common stock repurchases — — (38,960) — — — (38,960) —
Distributions — — — — — — — (240)
Balance, July 2, 2022 9,298,235 $ 93 $ (100,000) $ 263,626 $ 688,358 $ (515) $ 851,562 $ 677
Net income — — — — 74,116 — 74,116 82
Other comprehensive loss, net — — — — — (303) (303) —
Issuance of common stock under stock incentive plans, net 15,917 — — 1,457 — — 1,457 —
Stock-based compensation — — — 2,100 — — 2,100 —
Distributions — — — — — — — (240)
Subsequent change in redemption value — — — — — — — 407
Balance, October 1, 2022 9,314,152 $ 93 $ (100,000) $ 267,183 $ 762,474 $ (818) $ 928,932 $ 926

~~Table of Contents~~


	Equity Attributable to Cavco Stockholders
				Treasury stock		Additional paid-in capital		Retained earnings		Accumulated other comprehensive loss		Total		Redeemable noncontrolling interest
	Common Stock
	Shares	Amount
Balance, April 1, 2023	9,337,125	$	93	$	(164,452)	$	271,950	$	869,310	$	(615)	$	976,286	$	1,219
Net income	—	—		—		—		46,357		—		46,357		54
Other comprehensive loss, net	—	—		—		—		—		(42)		(42)		—
Issuance of common stock under stock incentive plans, net	10,095	—		—		(1,213)		—		—		(1,213)		—
Stock-based compensation	—	—		—		1,438		—		—		1,438		—

Distributions	—	—		—		—		—		—		—		(120)
Valuation adjustment	—	—		—		—		—		—		—		(33)
Balance, July 1, 2023	9,347,220	$	93	$	(164,452)	$	272,175	$	915,667	$	(657)	$	1,022,826	$	1,120


		Equity Attributable to Cavco Stockholders																														Equity Attributable to Cavco Stockholders
					Treasury Stock				Additional paid-in capital		Retained earnings				Accumulated other comprehensive income (loss)			Total					Redeemable Noncontrolling Interest															Treasury stock			Additional paid-in capital			Retained earnings			Accumulated other comprehensive loss			Total				Redeemable noncontrolling interest
		Common Stock															Common Stock											Treasury stock		Additional paid-in capital	Retained earnings		Accumulated other comprehensive loss	Total			Redeemable noncontrolling interest
		Shares	Amount														Shares									Amount
Balance, April 3, 2021		9,241,256	$	92			$	(1,441)					$	253,835							$	431,057					$									97			$	683,640		$	—
Balance, April 2, 2022																															Balance, April 2, 2022	9,292,278			$	93		$	(61,040)		$	263,049		$	628,756		$	(403)		$	830,455			$	825
Net income	Net income	—	—				—						—							27,046					—				27,046			—						Net income		—			—			—			—			59,602	—			59,602	92
Other comprehensive loss, net	Other comprehensive loss, net	—	—		—				—		—				(13)			(13)					—								Other comprehensive loss, net	—			—			—			—			—			(112)			(112)				—
Issuance of common stock under stock incentive plans, net	Issuance of common stock under stock incentive plans, net	4,465	—		—				136		—				—			136					—								Issuance of common stock under stock incentive plans, net	5,957			—			—			(848)			—			—			(848)				—
Stock-based compensation	Stock-based compensation	—	—		—				1,100		—				—			1,100					—								Stock-based compensation	—			—			—			1,425			—			—			1,425				—
Common stock repurchases	Common stock repurchases	—	—		(12,842)				—		—				—			(12,842)					—								Common stock repurchases	—			—			(38,960)			—			—			—			(38,960)				—
Balance, July 3, 2021		9,245,721	$	92	$	(14,283)			$	255,071	$	458,103			$	84		$	699,067				$	—
Initial value of noncontrolling interest upon transaction		—	—		—				—		—				—			—					1,235
Net income		—	—		—				—		37,610				—			37,610					73
Other comprehensive income, net		—	—		—				—		—				(13)			(13)					—
Issuance of common stock under stock incentive plans, net		29,295	1		—				2,728		—				—			2,729					—
Stock-based compensation		—	—		—				1,317		—				—			1,317					—
Common stock repurchases		—	—		(7,594)				—		—				—			(7,594)					—
Distributions	Distributions	—	—		—				—		—				—			—					(180)								Distributions	—			—			—			—			—			—			—				(240)
Balance, October 2, 2021		9,275,016	$	93	$	(21,877)			$	259,116	$	495,713			$	71		$	733,116				$	1,128
Balance, July 2, 2022																															Balance, July 2, 2022	9,298,235			$	93		$	(100,000)		$	263,626		$	688,358		$	(515)		$	851,562			$	677

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~~16.~~17. Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per share (dollars in thousands, except per share amounts):


		Three Months Ended				Six Months Ended					Three Months Ended
		October 1, 2022		October 2, 2021		October 1, 2022		October 2, 2021				July 1, 2023		July 2, 2022
Net income attributable to Cavco common stockholders	Net income attributable to Cavco common stockholders	$	74,116	$	37,610	$	133,718	$	64,656	Net income attributable to Cavco common stockholders		$	46,357	$	59,602
Weighted average shares outstanding	Weighted average shares outstanding									Weighted average shares outstanding
Basic	Basic	8,903,703		9,190,866		8,910,933		9,194,577		Basic		8,670,434		8,918,280
Effect of dilutive securities	Effect of dilutive securities	75,294		82,270		72,492		79,863		Effect of dilutive securities		87,646		70,649
Diluted	Diluted	8,978,997		9,273,136		8,983,425		9,274,440		Diluted		8,758,080		8,988,929
Net income per share attributable to Cavco common stockholders	Net income per share attributable to Cavco common stockholders									Net income per share attributable to Cavco common stockholders
Basic	Basic	$	8.32	$	4.09	$	15.01	$	7.03	Basic		$	5.35	$	6.68
Diluted	Diluted	$	8.25	$	4.06	$	14.88	$	6.97	Diluted		$	5.29	$	6.63

Anti-dilutive common stock equivalents excluded	Anti-dilutive common stock equivalents excluded	413		2,808		596		5,417		Anti-dilutive common stock equivalents excluded		39		1,617

~~17.~~18. Fair Value Measurements

The book value and estimated fair value of our financial instruments were as follows (in thousands):


		October 1, 2022				April 2, 2022					July 1, 2023				April 1, 2023
		Book Value		Estimated Fair Value		Book Value		Estimated Fair Value			Book Value		Estimated Fair Value		Book Value		Estimated Fair Value
Available-for-sale debt securities	Available-for-sale debt securities	$	19,488	$	19,488	$	17,760	$	17,760	Available-for-sale debt securities	$	17,292	$	17,292	$	18,555	$	18,555
Marketable equity securities	Marketable equity securities	14,441		14,441		16,780		16,780		Marketable equity securities	9,798		9,798		9,989		9,989
Non-marketable equity investments	Non-marketable equity investments	20,761		20,761		20,479		20,479		Non-marketable equity investments	5,050		5,050		5,073		5,073
Consumer loans receivable	Consumer loans receivable	46,970		53,340		49,884		53,354		Consumer loans receivable	39,368		44,604		44,148		50,686
Commercial loans receivable	Commercial loans receivable	76,105		71,878		68,566		65,942		Commercial loans receivable	105,459		99,281		101,977		97,106
Other secured financing	Other secured financing	(2,585)		(2,468)		(2,933)		(3,119)		Other secured financing	(2,184)		(2,078)		(2,379)		(2,332)

See Note ~~19,~~20, Fair Value Measurements, and the Fair Value of Financial Instruments caption in Note 1, Summary of Significant Accounting Policies, in the Form 10-K for more information on the methodologies we use in determining fair value.

Mortgage Servicing. Mortgage Servicing Rights ("MSRs") are ~~the rights to receive a portion of the interest coupon and fees collected from the mortgagors for performing specified mortgage servicing activities. MSRs are~~ recorded at fair value in Prepaid expenses and other current assets on the Consolidated Balance Sheets.


		October 1, 2022			April 2, 2022				July 1, 2023			April 1, 2023
Number of loans serviced with MSRs	Number of loans serviced with MSRs	4,153			4,346			Number of loans serviced with MSRs	4,018			4,070
Weighted average servicing fee (basis points)	Weighted average servicing fee (basis points)	34.74			34.76			Weighted average servicing fee (basis points)	34.69			34.71
Capitalized servicing multiple	Capitalized servicing multiple	109.7		%	85.07		%	Capitalized servicing multiple	176.5		%	98.99		%
Capitalized servicing rate (basis points)	Capitalized servicing rate (basis points)	38.10			29.57			Capitalized servicing rate (basis points)	61.23			34.36
Serviced portfolio with MSRs (in thousands)	Serviced portfolio with MSRs (in thousands)	$	535,339		$	560,178		Serviced portfolio with MSRs (in thousands)	$	512,707		$	520,458
MSRs (in thousands)	MSRs (in thousands)	$	2,039		$	1,656		MSRs (in thousands)	$	3,140		$	1,788

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~~18.~~19. Related Party Transactions

~~In addition to our Company-owned stores, we~~We have non-marketable equity investments in other ~~manufactured housing distributors.~~distribution operations outside of Company-owned retail stores. In the ordinary course of business, we sell homes and lend to certain of these ~~distributors~~operations through our commercial lending programs. For the three ~~and six~~ months ended ~~October~~July 1, 2023 and July 2, 2022, the total amount of sales to related parties was ~~$20.1~~$15.1 million and ~~$37.3 million, respectively. For the three and six months ended October 2, 2021, the total amount of sales to related parties was $14.0 million and $28.8~~$17.2 million, respectively. As of ~~October~~July 1, ~~2022,~~2023, receivables from related parties included ~~$5.1~~$6.5 million of accounts receivable and ~~$2.2~~$5.1 million of commercial loans outstanding. As of April ~~2, 2022,~~1, 2023, receivables from related parties included ~~$3.3~~$5.7 million of accounts receivable and ~~$2.6~~$4.7 million of commercial loans outstanding.

~~19.~~20. Acquisition

On January 3, 2023 (the "Acquisition Date"), we completed the acquisition of Solitaire Homes, including their four manufacturing facilities and twenty-two retail locations by acquiring 100% of the outstanding stock of Solitaire Homes for $110.8 million, subject to customary adjustments.

Our provisional estimates of the fair values of the assets that we acquired and the liabilities that we assumed were based on the information that was available as of the Acquisition Date. We are continuing to evaluate the underlying inputs and assumptions used in our valuations. Accordingly, these provisional estimates are subject to change during the measurement period, which is up to one year from the Acquisition Date. During the first quarter of fiscal 2024, we made certain adjustments to the assets and liabilities based on information that became available.

The following table presents our provisional estimates of the fair values of the assets that we acquired and the liabilities that we assumed on the Acquisition Date as of the end of the 2024 first quarter (in thousands):


	January 3, 2023		Adjustments		January 3, 2023 (as Adjusted at July 1, 2023)
Cash	$	5,119	$	(77)	$	5,042
Investments	334		—		334
Accounts receivable	3,536		(778)		2,758
Inventories	58,045		(54)		57,991
Property, plant and equipment	36,109		(70)		36,039
Other current assets	1,519		—		1,519
Intangible assets(1)	3,400		—		3,400
Total identifiable assets acquired	108,062		(979)		107,083
Accounts payable and accrued liabilities	11,251		(28)		11,223
Net identifiable assets acquired	96,811		(951)		95,860
Goodwill(2)	13,970		951		14,921
Net assets acquired	$	110,781	$	—	$	110,781

(1) Includes $1.3 million assigned to trade names, which are considered indefinite lived intangible assets and are not subject to amortization, $1.9 million assigned to customer-related intangibles, subject to a useful life of 10 years amortized on a straight-line basis, and $0.2 million for covenants not to compete from the sellers amortized on a straight-line basis over the term of 5 years.

(2) Attributable to the Factory-built housing segment, all of which will be deductible for income tax purposes.

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Pro Forma Impact of Acquisition (Unaudited). The following table presents supplemental pro forma information as if the above acquisition had occurred on April 3, 2022 (in thousands, except per share data):


	Three Months Ended
	July 2, 2022
Net revenue	$	624,511
Net income attributable to Cavco common stockholders	61,645
Diluted net income per share	6.86

21. Business Segment Information

We operate principally in two segments: (1) factory-built housing, which includes wholesale and retail factory-built housing operations, and (2) financial services, which includes manufactured housing consumer finance and insurance. The following table provides selected financial data by segment (in thousands):


		Three Months Ended				Six Months Ended					Three Months Ended
		October 1, 2022		October 2, 2021		October 1, 2022		October 2, 2021				July 1, 2023		July 2, 2022
Net revenue
Net revenue:										Net revenue:
Factory-built housing	Factory-built housing	$	559,602	$	342,094	$	1,132,199	$	654,377	Factory-built housing		$	457,109	$	572,597
Financial services	Financial services	17,790		17,449		33,531		35,588		Financial services		18,766		15,741
		$	577,392	$	359,543	$	1,165,730	$	689,965			$	475,875	$	588,338

Income (loss) before income taxes
Income (loss) before income taxes:										Income (loss) before income taxes:
Factory-built housing	Factory-built housing	$	90,374	$	46,893	$	170,146	$	80,452	Factory-built housing		$	61,825	$	79,772
Financial services	Financial services	2,437		2,128		1,975		4,047		Financial services		(1,148)		(462)
		$	92,811	$	49,021	$	172,121	$	84,499			$	60,677	$	79,310

October 1,
2022 April 2,
2022
Total assets:
Factory-built housing $ 1,096,450 $ 929,535
Financial services 168,216 225,437
$ 1,264,666 $ 1,154,972

~~20. Subsequent Event~~

As announced on October 27, 2022 in a current report on Form 8-K, we have signed a binding offer to acquire the business of Solitaire Homes, Inc. and other related entities (collectively “Solitaire Homes”), including its four manufacturing facilities, twenty-two retail locations and its dedicated transportation operations.

~~The addition of Solitaire Homes strengthens our position in the Southwest, with high quality products that complement our existing home offerings.~~

The purchase price totals $93 million, before certain adjustments that will be determined upon close of the transaction. We expect to fund the acquisition entirely with cash on hand. The transaction is expected to close early in the Company's fourth quarter of fiscal year 2023, subject to applicable regulatory approvals and the satisfaction of certain customary conditions.


	July 1, 2023		April 1, 2023
Total assets:
Factory-built housing	$	1,151,632	$	1,107,555
Financial services	201,415		200,420
	$	1,353,047	$	1,307,975

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~~Item~~45Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

Statements in this Report on Form 10-Q ("Report") include "forward-looking statements," within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act"), and the Private Securities Litigation Reform Act of 1995. Forward-looking statements are often characterized by the use of words such as "believes," "estimates," "expects," "projects," "may," "will," "intends," "plans," or "anticipates," or by discussions of strategy, plans or intentions. Forward-looking statements include, for example, discussions regarding the manufactured housing and site-built housing industries; our financial performance and operating results; our strategy; our liquidity and financial resources; our outlook with respect to Cavco Industries, Inc. and its ~~subsidiaries'~~subsidiaries (collectively, "we," "us," "our," the "Company" or "Cavco") and the manufactured housing business in general; the expected effect of certain risks and uncertainties on our business, financial condition and results of operations; economic conditions, including concerns of a possible recession, and consumer confidence; trends in interest rates and inflation; potential acquisitions, strategic investments and other expansions; the sufficiency of our liquidity; that we may seek alternative sources of financing in the future; operational and legal risks; how we may be affected by ~~the COVID-19 pandemic ("COVID-19") or~~ any ~~other~~ pandemic or outbreak; geopolitical conditions (including the continuing Russia-Ukraine conflict); the cost and availability of labor and raw materials; governmental regulations and legal proceedings; the availability of favorable consumer and wholesale manufactured home financing; and the ultimate outcome of our commitments and contingencies. Forward-looking statements contained in this Report speak only as of the date of this ~~report~~Report or, in the case of any document incorporated by reference, the date of that document. We do not intend to publicly update or revise any forward-looking statement contained in this Report or in any document incorporated herein by reference to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time, except as required by law.

Forward-looking statements involve risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from those expressed or implied by such forward-looking statements, many of which are beyond our control. To the extent that our assumptions and expectations differ from actual results, our ability to meet such forward-looking statements, including the ability to generate positive cash flow from operations, may be significantly hindered. Factors that could affect our results and cause them to materially differ from those contained in the forward-looking statements include, without limitation, those discussed under Risk Factors in Part I, Item 1A of our ~~2022~~2023 Annual Report on Form 10-K filed with the Securities and Exchange Commission (the "Form 10-K").

Introduction

The following should be read in conjunction with the Company's Consolidated Financial Statements and the related Notes that appear in Part I, Item 1 of this Report. References to "Note" or "Notes" pertain to the Notes to our Consolidated Financial Statements.

Company Overview

Headquartered in Phoenix, Arizona, we design and produce factory-built ~~housing products~~homes primarily distributed through a network of independent and Company-owned retailers, planned community operators and residential developers. We are one of the largest producers of manufactured homes in the United States, based on reported wholesale shipments. Our products are marketed under a variety of brand names including Cavco, Fleetwood, Palm Harbor, Nationwide, Fairmont, Friendship, Chariot Eagle, Destiny, Commodore, Colony, Pennwest, R-Anell, Manorwood, MidCountry and ~~MidCountry.~~Solitaire. We are also a leading producer of park model RVs, vacation cabins and factory-built commercial structures. Our finance subsidiary, CountryPlace Acceptance Corp. ("CountryPlace"), is an approved Federal National Mortgage Association ("~~Fannie~~FNMA" or "Fannie Mae") and Federal Home Loan Mortgage Corporation ("~~Freddie~~FHLMC" or "Freddie Mac") seller/servicer, and a Government National Mortgage Association ("~~Ginnie~~GNMA" or "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 Company ("Standard Casualty"), provides property and casualty insurance primarily to owners of manufactured homes.

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We operate 26a total of 31 homebuilding production lines in Millersburg and Woodburn, Oregon; Riverside, California; Nampa, Idaho; Phoenix, Glendale and Goodyear, Arizona; Deming, New Mexico; Duncan, Oklahoma; Austin, Fort Worth, Seguin and Waco, Texas; Montevideo, Minnesota; Dorchester, Wisconsin; Nappanee and Goshen, Indiana; Lafayette, Tennessee; Douglas and Moultrie, Georgia; Shippenville and Emlenton, Pennsylvania; Martinsville and Rocky Mount, Virginia; ~~Cherryville,~~Crouse and Hamlet, North Carolina; ~~and~~ Ocala and Plant City, ~~Florida.~~Florida; and two in Ojinaga, Mexico. We also recently opened two new production lines in Glendale, Arizona and Hamlet, North Carolina. The majority of the homes produced are sold to, and distributed by, independently owned retail operations located throughout the United States and Canada. In addition,distribute our homes ~~are sold~~ through 42a large network of independent distribution points in 48 states and Canada and 68 Company-owned U.S. retail ~~locations.~~

~~During fiscal 2022, we acquired an additional 20% ownership~~stores, of which 41 are located in Craftsman Homes, LLC and Craftsman Homes Development, LLC (collectively known as "Craftsman"), which gave us a controlling interest. Craftsman is a manufactured home retailer with four locations in Nevada selling Company and other manufacturer branded homes. We also purchased certain manufactured housing assets and assumed certain liabilities of The Commodore Corporation ("Commodore"). Commodore added six manufacturing facilities and two wholly-owned retail locations, and also participates in commercial lending operations with its dealers.

On October 26, 2022, subsequent to the end of the second fiscal quarter of 2023, we signed a binding offer to acquire the business of Solitaire Homes, Inc. and other related entities (collectively “Solitaire Homes”), including its four manufacturing facilities, twenty-two retail locations and its dedicated transportation operations. The transaction is expected to close early in our fourth fiscal quarter of 2023, subject to applicable regulatory approvals and the satisfaction of certain customary conditions. The addition of Solitaire Homes to our existing manufacturing and retail system strengthens our position in the Southwest and expands our manufacturing capabilities into Mexico.Texas.

Company and Industry Outlook

According to data reported by the Manufactured Housing Institute, industry home shipments ~~increased 14.2%~~ for the ~~first 8 months of~~ calendar year ~~2022~~through May 2023 were 35,714, a decrease of 29.0% compared to 50,278 shipments in the same calendar period last year.

~~The~~ Higher interest rates and continued inflationary pressures have tempered industry demand. However, the manufactured housing industry offers solutions to the ~~affordable~~ housing crisis ~~and these shipment numbers reflect the industry's ability to produce in the current environment. The~~with lower average price per square foot ~~for a manufactured home is usually lower~~ than a site-built ~~home. Also, based on~~home and the comparatively low cost associated with manufactured home ownership ~~our products have traditionally competed~~remains competitive with rental ~~housing's monthly payment affordability.~~housing.

The two largest manufactured housing consumer demographics, young adults and those who are age 55 and older, are both growing. "First-time" and "move-up" buyers of affordable homes are historically among the largest segments of new manufactured home purchasers. Included in this group are lower-income households that are particularly affected by periods of low employment rates and underemployment. Consumer confidence is especially important among manufactured home buyers interested in our products for seasonal or retirement living.

We employ a concerted effort to identify niche market opportunities where our diverse product lines and ~~custom~~flexible building capabilities provide us with a competitive advantage. We are focused on building quality, energy efficient homes for the modern home buyer. Our green building initiatives involve the creation of an energy efficient envelope resulting in lower utility costs, as well as the higher utilization of renewable materials in our manufacturing process. We also build homes designed to use alternative energy sources, such as solar.

We maintain a conservative cost structure in an effort to build added value into our homes and we work diligently to maintain a solid financial position. Our balance sheet strength, including the position in cash and cash equivalents, helps avoid liquidity problems and enables us to act effectively as market opportunities or challenges present themselves.

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We continue to make certain commercial loan programs available to members of our wholesale distribution chain. Under direct commercial loan arrangements, we provide funds for financed home purchases by distributors, community operators and residential developers (see Note 7 to the Consolidated Financial Statements). Our involvement in commercial lending helps to increase the availability of manufactured home financing to distributors, community operators and residential developers and provides additional opportunities for product exposure to potential home buyers. While these initiatives support our ongoing efforts to expand product distribution, they also expose us to risks associated with the creditworthiness of this customer base and our inventory financing partners.

The lack of an efficient secondary market for manufactured home-only loans and the limited number of institutions providing such loans results in higher borrowing costs for home-only loans and continues to constrain industry growth. We work independently and with other industry participants to develop secondary market opportunities for manufactured home-only loan and non-conforming mortgage portfolios and expand lending availability in the industry. Additionally, we continue to invest in community-based lending initiatives that provide home-only financing to residents of certain manufactured home communities. We also develop and invest in home-only lending programs to grow sales of homes through traditional distribution points. We believe that growing our investment and participation in home-only lending may provide additional sales growth opportunities for our factory-built housing operations and reduce our exposure to the actions of independent lenders.

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Key housing building materials include wood, wood products, steel, gypsum wallboard, windows, doors fiberglass insulation, carpet, vinyl, fasteners, plumbing materials, aluminum, appliances and electrical items. Fluctuations in the cost of materials and labor may affect gross margins from home sales to the extent that costs cannot be efficiently matched to the home sales price. Pricing and availability of certain raw materials have ~~recently~~ been volatile due to a number of factors in the current environment. We continue to monitor and react to inflation in these materials by maintaining a focus on our product pricing in response to higher materials costs, but such product pricing increases may lag behind the escalation of such costs. From time to time and to varying degrees, we may experience shortages in the availability of materials and/or labor in the markets served. Availability of these inputs has not caused significant production halts in the current period, but we have experienced periodic shutdowns in other periods and shortages of primary building materials have caused production inefficiencies as we have needed to change processes in response to the delay in materials. These shortages may also result in extended order backlogs, delays in the delivery of homes and reduced gross margins from home sales.

Our backlog at ~~October~~July 1, ~~2022~~2023 was $~~651~~177 million compared to ~~$1.0 billion last quarter,~~$244 million at April 1, 2023, a decrease of ~~$347~~$67 million and down $823 million ~~or 34.8%,~~c~~and down $456 million, or 41.2%, compared~~ompared to ~~$1.1~~$1.0 billion at ~~October~~July 2, 2021. Home order rates, net of cancellations, are down from the extreme highs we saw during the summer of 2020 to the summer of 2021. Additionally, our efforts in product simplification and production staffing improvement have increased our total average plant capacity utilization.2022.

While it is difficult to predict the future of housing demand, employee availability, supply chain and Company performance and operations, maintaining an appropriately sized and well-trained workforce is key to ~~increasing production to meet increased demand, and we face challenges in overcoming labor-related difficulties in the current environment to increase home production.~~meeting demand. We continually review the wage rates of our production employees and have established other monetary incentive and benefit programs, with a goal of providing competitive compensation. We are also working to more extensively use web-based recruiting tools, update our recruitment brochures and improve the appearance and appeal of our manufacturing facilities to improve the recruitment and retention of qualified production employees and reduce annualized turnover rates. ~~We believe our ability to recruit the workforce we need to help meet the overall need for affordable housing continues to improve.~~

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In the financial services segment, we continue to assist customers in need by servicing existing loans and insurance policies and complying with state and federal regulations regarding loan forbearance, home foreclosures and policy cancellations. Certain loans serviced for investors expose us to cash flow deficits if customers do not make contractual monthly payments of principal and interest in a timely manner. For certain loans serviced for Ginnie Mae and Freddie Mac, and home-only loans serviced for certain other investors, we must remit scheduled monthly principal and/or interest payments and principal curtailments regardless of whether monthly mortgage payments are collected from borrowers. Ginnie Mae permits cash obligations on loans in forbearance from COVID-19 to be offset by other incoming cash flows from loans such as loan pre-payments. Monthly collections of principal and interest from borrowers have exceeded scheduled principal and interest payments owed to investors; however, mandatory extended forbearance under the Coronavirus Aid, Relief and Economic Security Act and certain other regulations related to COVID-19 could negatively impact cash obligations in the future.

Results of Operations

Net Revenue


		Three Months Ended									Three Months Ended
($ in thousands, except revenue per home sold)	($ in thousands, except revenue per home sold)	October 1, 2022		October 2, 2021		Change				($ in thousands, except revenue per home sold)	July 1, 2023		July 2, 2022		Change
Factory-built housing	Factory-built housing	$	559,602	$	342,094	$	217,508	63.6	%	Factory-built housing	$	457,109	$	572,597	$	(115,488)	(20.2)	%
Financial services	Financial services	17,790		17,449		341		2.0	%	Financial services	18,766		15,741		3,025		19.2	%
		$	577,392	$	359,543	$	217,849	60.6	%		$	475,875	$	588,338	$	(112,463)	(19.1)	%
Factory-built homes sold	Factory-built homes sold									Factory-built homes sold
by Company-owned retail sales centers	by Company-owned retail sales centers	860		710		150		21.1	%	by Company-owned retail sales centers	959		873		86		9.9	%
to independent retailers, builders, communities and developers	to independent retailers, builders, communities and developers	4,251		2,887		1,364		47.2	%	to independent retailers, builders, communities and developers	3,623		4,473		(850)		(19.0)	%
		5,111		3,597		1,514		42.1	%		4,582		5,346		(764)		(14.3)	%
Net factory-built housing revenue per home sold	Net factory-built housing revenue per home sold	$	109,490	$	95,105	$	14,385	15.1	%	Net factory-built housing revenue per home sold	$	99,762	$	107,108	$	(7,346)	(6.9)	%

		Six Months Ended
($ in thousands, except revenue per home sold)		October 1, 2022		October 2, 2021		Change
Factory-built housing		$	1,132,199	$	654,377	$	477,822	73.0	%
Financial services		33,531		35,588		(2,057)		(5.8)	%
		$	1,165,730	$	689,965	$	475,765	69.0	%
Factory-built homes sold
by Company-owned retail sales centers		1,733		1,433		300		20.9	%
to independent retailers, builders, communities and developers		8,724		5,864		2,860		48.8	%
		10,457		7,297		3,160		43.3	%
Net factory-built housing revenue per home sold		$	108,272	$	89,678	$	18,594	20.7	%

In factory-built housing, Net revenue ~~for both the three and six months ended October 1, 2022 increased~~decreased compared to the respective ~~periods~~period in the prior year due to ~~higher~~lower home sales volume and ~~higher~~lower home selling ~~prices. Home sales volume increased from~~prices, partially offset by the ~~Commodore acquisition, completed in the second quarter~~addition of fiscal year 2022, which provided $107 million and $208 million in Net revenue for the three and six months ended October 1, 2022, respectively. The three and six months also benefited from higher factory capacity utilization which enabled higher sales volume.

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Solitaire Homes.

Net factory-built housing revenue per home sold is a volatile metric dependent upon several factors. A primary factor is the price disparity between sales of homes to independent distributors, builders, communities and developers and sales of homes to consumers by Company-owned retail stores. Wholesale sales prices are primarily comprised of the home and the cost to ship the home from a homebuilding facility to the home-site. Retail home prices include these items and retail markup, as well as items that are largely subject to home buyer discretion, including, but not limited to, installation, utility connections, site improvements, landscaping and additional services. Our homes are constructed in one or more floor sections ("modules") which are then installed on the customer's site. Changes in the number of modules per home, the selection of different home types/models and optional home upgrades create changes in product mix, also causing fluctuations in this metric. ~~The table below presents the mix of modules and homes sold for the three and six months ended October 1, 2022 and October 2, 2021:~~

Three Months Ended
October 1,
2022 October 2,
2021 Change
Modules Homes Modules Homes Modules Homes
U.S. Housing and Urban Development ("HUD") code homes 8,099 4,639 5,548 3,154 46.0 % 47.1 %
Modular homes 444 226 519 254 (14.5) % (11.0) %
Park model RVs 246 246 189 189 30.2 % 30.2 %
8,789 5,111 6,256 3,597 40.5 % 42.1 %
Six Months Ended
October 1,
2022 October 2,
2021 Change
Modules Homes Modules Homes Modules Homes
HUD code homes 16,614 9,493 11,200 6,430 48.3 % 47.6 %
Modular homes 930 477 987 480 (5.8) % (0.6) %
Park model RVs 487 487 387 387 25.8 % 25.8 %
18,031 10,457 12,574 7,297 43.4 % 43.3 %

For the three months ended October 1, 2022, Financial services segment Net revenue increased 2.0% primarily due to higher volume in home loan sales in the period. For the six months ended October 1, 2022, Net revenue decreased 5.8% primarily due to realized and unrealized losses on marketable equity securities in the insurance subsidiary's portfolio during such period, lower interest income earned on the acquired consumer loan portfolios, and lower volume in home loan sales. These items were partially offset by more insurance policies in force in the current year compared to the prior year.

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For the three months ended July 1, 2023, Net revenue in Financial Services increased 19.2% primarily due to realized and unrealized gains on marketable equity securities in the insurance subsidiary's portfolio compared to losses during the prior year period and more insurance policies in force in the current period compared to the prior period. This was partially offset by lower interest income earned on the acquired consumer loan portfolios.

Gross Profit


		Three Months Ended											Three Months Ended
($ in thousands)	($ in thousands)	October 1, 2022			October 2, 2021			Change				($ in thousands)	July 1, 2023			July 2, 2022			Change
Factory-built housing	Factory-built housing	$	149,665		$	82,299		$	67,366	81.9	%	Factory-built housing	$	113,368		$	139,586		$	(26,218)	(18.8)	%
Financial services	Financial services	7,934			7,629			305		4.0	%	Financial services	4,511			5,138			(627)		(12.2)	%
		$	157,599		$	89,928		$	67,671	75.3	%		$	117,879		$	144,724		$	(26,845)	(18.5)	%

Gross profit as % of Net revenue	Gross profit as % of Net revenue											Gross profit as % of Net revenue
Consolidated	Consolidated	27.3		%	25.0		%	N/A		2.3	%	Consolidated	24.8		%	24.6		%	N/A		0.2	%
Factory-built housing	Factory-built housing	26.7		%	24.1		%	N/A		2.6	%	Factory-built housing	24.8		%	24.4		%	N/A		0.4	%
Financial services	Financial services	44.6		%	43.7		%	N/A		0.9	%	Financial services	24.0		%	32.6		%	N/A		(8.6)	%

		Six Months Ended
($ in thousands)		October 1, 2022			October 2, 2021			Change
Factory-built housing		$	289,251		$	148,572		$	140,679	94.7	%
Financial services		13,072			15,369			(2,297)		(14.9)	%
		$	302,323		$	163,941		$	138,382	84.4	%

Gross profit as % of Net revenue
Consolidated		25.9		%	23.8		%	N/A		2.1	%
Factory-built housing		25.5		%	22.7		%	N/A		2.8	%
Financial services		39.0		%	43.2		%	N/A		(4.2)	%

Factory-built housing Gross profit ~~and the Gross profit~~ percentage increased ~~for the three and six months ended October 1, 2022~~ primarily due to ~~higher average sales prices.~~favorable material costs.

In Financial services, Gross profit ~~increased for the three months ended October 1, 2022 primarily due to the higher volume of home loan sales. For the six months ended October 1, 2022, Financial services gross~~and Gross profit percentage decreased primarily due to higher insurance claims from ~~New Mexico~~Arizona and ~~Arizona~~Texas weather related events partially offset by greater realized and ~~greater~~ unrealized ~~losses~~gains on marketable equity securities in the current period compared to the same period last year.

~~Table of Contents~~

Selling, General and Administrative Expenses


		Three Months Ended											Three Months Ended
($ in thousands)	($ in thousands)	October 1, 2022			October 2, 2021			Change				($ in thousands)	July 1, 2023			July 2, 2022			Change
Factory-built housing	Factory-built housing	$	61,640		$	40,347		$	21,293	52.8	%	Factory-built housing	$	56,021		$	60,923		$	(4,902)	(8.0)	%
Financial services	Financial services	5,254			5,025			229		4.6	%	Financial services	5,659			5,213			446		8.6	%
		$	66,894		$	45,372		$	21,522	47.4	%		$	61,680		$	66,136		$	(4,456)	(6.7)	%
Selling, general and administrative expenses as % of Net revenue	Selling, general and administrative expenses as % of Net revenue	11.6		%	12.6		%	N/A		(1.0)	%	Selling, general and administrative expenses as % of Net revenue	13.0		%	11.2		%	N/A		1.8	%

		Six Months Ended
($ in thousands)		October 1, 2022			October 2, 2021			Change
Factory-built housing		$	122,563		$	75,844		$	46,719	61.6	%
Financial services		10,467			10,360			107		1.0	%
		$	133,030		$	86,204		$	46,826	54.3	%
Selling, general and administrative expenses as % of Net revenue		11.4		%	12.5		%	N/A		(1.1)	%

~~For the three and six months ended October 1, 2022,~~ Selling, general and administrative expenses ~~related to factory-built housing increased between periods~~decreased primarily from ~~the addition of Commodore, as well as higher salary~~lower legal expenses, professional fees and incentive compensation expense, ~~on improved earnings and~~partially offset by higher ~~legal and professional fees.~~

~~As a percentage~~expenses reflecting the addition of Net revenue, Selling, general and administrative expenses improved by 100 and 110 basis points for the three and six months ended October 1, 2022, respectively, from better utilization of fixed costs on higher sales.Solitaire Homes.

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Other Components of Net Income


		Three Months Ended											Three Months Ended
($ in thousands)	($ in thousands)	October 1, 2022			October 2, 2021			Change				($ in thousands)	July 1, 2023			July 2, 2022			Change
Interest income												Interest income	$	4,618		$	1,314		$	3,304	251.4	%
Interest expense	Interest expense	$	233		$	203		$	30	14.8	%	Interest expense	(266)			(161)			(105)		65.2	%
Other income, net		2,339			4,668			(2,329)		(49.9)	%
Income tax (benefit) expense		18,613			11,338			7,275		64.2	%
Effective tax rate		20.1		%	23.1		%	N/A		(3.0)	%

		Six Months Ended
($ in thousands)		October 1, 2022			October 2, 2021			Change
Interest expense		$	394		$	367		$	27	7.4	%
Other income, net		3,222			7,129			(3,907)		(54.8)	%
Other income (expense), net												Other income (expense), net	126			(431)			557		N/M
Income tax expense	Income tax expense	38,229			19,770			18,459		93.4	%	Income tax expense	(14,266)			(19,616)			(5,350)		(27.3)	%
Effective tax rate	Effective tax rate	22.2		%	23.4		%	N/A		(1.2)	%	Effective tax rate	23.5		%	24.7		%	N/A		(1.20)	%

Interest income consists primarily of interest earned on cash balances held in money market accounts, and interest earned on commercial floorplan lending. Interest expense consists primarily of interest related to finance leases.

Other income (expense), net primarily consists of realized and unrealized gains and losses on corporate investments ~~interest income related to commercial loan receivable balances, interest income earned on cash balances~~ and gains and losses from the sale of property, plant and equipment. The decrease in Other income, net is primarily due to a $3.3 million gain recognized in the second quarter of last year on the remeasurement of the assets and liabilities of Craftsman upon acquisition of a controlling interest. Additionally, forFor the ~~six~~three months ended ~~October~~July 1, ~~2022,~~2023, we recognized a ~~$1.1~~$0.1 million ~~unrealized loss~~gain on corporate marketable investments compared to a ~~$1.7~~$1.1 million ~~unrealized gain~~loss in the prior year. ~~These items were partially offset by higher interest income earned on a larger cash balance held in high yield money market funds.~~

The effective tax rate for the current year periods benefited from $2.7 million of estimated non-recurring net tax credits related to the sale of energy efficient homes, available under the Internal Revenue Code §45L. This program expired on December 31, 2021 and was recently renewed as part of the Inflation Reduction Act legislation through December 31, 2022.

Liquidity and Capital Resources

We believe that cash and cash equivalents at ~~October~~July 1, ~~2022,~~2023, together with cash flow from operations, will be sufficient to fund our operations, cover our obligations and provide for growth for the next 12 months and into the foreseeable future. We maintain cash in U.S. Treasury and other money market funds, some of which are in excess of federally insured ~~limits.~~limits, but we have not experienced any losses with regards to such excesses. We expect to continue to evaluate potential acquisitions of, or strategic investments in, businesses that are complementary to the Company, as well as other expansion opportunities. Such transactions may require the use of cash and have other impacts on our liquidity and capital resources. ~~Because of our~~We have sufficient liquid resources ~~we have not historically sought external sources~~including our recently implemented $50.0 million Revolving Credit Facility, of ~~liquidity, with the exception of certain credit facilities for our home-only lending programs.~~which no amounts were outstanding at July 1, 2023. Regardless, depending on our operating results and strategic opportunities, we may choose to seek additional or alternative sources of financing in the future. There can be no assurance that such financing would be available on satisfactory terms, if at all. If this financing were not available, it could be necessary for us to reevaluate our long-term operating plans to make more efficient use of our existing capital resources at such time. The exact nature of any changes to our plans that would be considered depends on various factors, such as conditions in the factory-built housing industry and general economic conditions outside of our control.

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State insurance regulations restrict the amount of dividends that can be paid to stockholders of insurance companies. As a result, the assets owned by our insurance subsidiary are generally not available to satisfy the claims of Cavco or its ~~legal~~ subsidiaries. We believe that stockholders' equity at the insurance subsidiary remains sufficient and do not believe that the ability to pay ordinary dividends to Cavco at anticipated levels will be restricted per state regulations.

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The following is a summary of the Company's cash flows for the ~~six~~three months ended ~~October~~July 1, ~~2022~~2023 and ~~October~~July 2, ~~2021,~~2022, respectively:


		Six Months Ended							Three Months Ended
(in thousands)	(in thousands)	October 1, 2022		October 2, 2021		$ Change		(in thousands)	July 1, 2023		July 2, 2022		$ Change
Cash, cash equivalents and restricted cash at beginning of the fiscal year	Cash, cash equivalents and restricted cash at beginning of the fiscal year	$	259,334	$	339,307	$	(79,973)	Cash, cash equivalents and restricted cash at beginning of the fiscal year	$	283,490	$	259,334	$	24,156
Net cash provided by operating activities	Net cash provided by operating activities	162,942		80,087		82,855		Net cash provided by operating activities	82,293		58,240		24,053
Net cash used in investing activities		(34,933)		(156,045)		121,112
Net cash provided (used) by investing activities								Net cash provided (used) by investing activities	2,086		(24,399)		26,485
Net cash used in financing activities	Net cash used in financing activities	(39,224)		(18,873)		(20,351)		Net cash used in financing activities	(1,490)		(40,213)		38,723
Cash, cash equivalents and restricted cash at end of the period	Cash, cash equivalents and restricted cash at end of the period	$	348,119	$	244,476	$	103,643	Cash, cash equivalents and restricted cash at end of the period	$	366,379	$	252,962	$	113,417

Net cash provided by operating activities increased primarily from ~~higher~~reductions in accounts receivable, inventories and prepaid expenses and other current assets. These increases were partially offset by lower net income, adjusted for non-cash items. ~~This increase was partially offset by increased lending in our Financial Services segment, as well as under our commercial loan programs.~~

Consumer loan originations ~~increased $11.8~~decreased $10.8 million to ~~$97.2~~$36.7 million for the ~~six~~three months ended ~~October~~July 1, ~~2022~~2023 from ~~$85.4~~$47.5 million for the ~~six~~three months ended ~~October~~July 2, ~~2021.~~2022, and proceeds from sales of consumer loans decreased $5.5 million.

Commercial loan originations increased $5.9 million to $28.7 million for the three months ended July 1, 2023 from $22.8 million for the three months ended July 2, 2022. Proceeds from the collection on commercial loans provided $25.2 million this year, compared to $19.0 million in the prior year, a net increase of $6.2 million.

Net cash ~~used in~~for investing activities consists of buying and selling debt and marketable equity securities in our Financial Services segment, purchases of property, plant and equipment and funding strategic growth acquisitions. Cash used in the ~~current~~prior year period reflects the purchase of our plant facilities in Hamlet, North Carolina. ~~Cash used in the prior period reflects the purchase of Commodore and Craftsman.~~

Net cash used in financing activities for the ~~current~~prior year period was primarily for the repurchase of common ~~stock during the first quarter of fiscal 2023.~~stock.

See Note 1415 to the Consolidated Financial Statements for a discussion of our off-balance sheet commitments, which discussion is incorporated herein by reference.

Obligations and Commitments. There were no material changes to the obligations and commitments as set forth in the Form 10-K.

Critical Accounting Estimates

There have been no significant changes to our critical accounting estimates during the ~~six~~three months ended ~~October~~July 1, ~~2022,~~2023, as compared to those disclosed in Part II, Item 7 of the Form 10-K, under the heading "Critical Accounting Estimates," which provides a discussion of the critical accounting estimates that management believes are critical to the Company's operating results or may affect ~~its more~~ significant judgments and estimates used in the preparation of the Company's Consolidated Financial Statements.

~~Other Matters~~

~~Impact of Inflation.~~ At the end of the period, inflation was the highest in the U.S. in over 30 years. Our ability to maintain certain levels of gross margin can be adversely impacted by sudden increases in specific costs, such as the increases in materials and labor. In addition, measures used by the Federal Reserve to combat inflation, such as increases in interest rates, could also have an impact on the ability of home buyers to obtain affordable financing. We can give no assurance that inflation will not affect our future profitability and financial position.

~~Table of Contents~~

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes from the quantitative and qualitative disclosures about market risk previously disclosed in the Form 10-K.

Table of Contents

Item 4. Controls and Procedures

(a) Disclosure Controls and Procedures

The Company carried out an evaluation, under the supervision and with the participation of the Company's management, including its President and Chief Executive Officer and its Chief Financial Officer, of the effectiveness of its disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)). Based upon that evaluation, the Company's President and Chief Executive Officer and its Chief Financial Officer concluded that, as of ~~October~~July 1, ~~2022,~~2023, its disclosure controls and procedures were effective.

(b) Changes in Internal Control Over Financial Reporting

There has been no change in the Company's internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) that occurred during the fiscal quarter ended ~~October~~July 1, ~~2022 which~~2023 that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

See the information under the "Legal Matters" caption in Note 1415 to the Consolidated Financial Statements, which is incorporated herein by reference.

Item 1A. Risk Factors

In addition to the other information set forth in this Report, you should carefully consider the factors discussed in Part I, Item 1A, Risk Factors, in the Form 10-K, which could materially affect our business, financial condition or future results. The risks described in this Report and in the Form 10-K are not the only risks facing the Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

Item 2. Unregistered Sales of Equity Securities, ~~and~~ Use of Proceeds and Issuer Repurchases of Equity Securities

Issuer Purchases of Equity Securities

As announced on May 26, 2022 in a current report on Form 8-K, the Company's Board of Directors approved a $100 million stock repurchase program with the same terms and conditions as the previous plan. There ~~have been~~were no repurchases ~~made~~during the fiscal quarter ended July 1, 2023 and $35.7 million remains available under this program.

On August 1, 2023, the Company's Board of Directors approved another $100 million stock repurchase program with the same terms and conditions as the previous plans. This increases the total amount available for repurchases to $135.7 million. The repurchase programs are funded using our available cash. Repurchases may be made in the open market or in privately negotiated transactions in compliance with applicable state and federal securities laws and other legal requirements. The level of repurchase activity is subject to market conditions and other investment opportunities. The repurchase programs do not obligate us to acquire any particular amount of common stock and may be suspended or discontinued at any time.

Item 5. Other Information

~~There is no other information required to be disclosed under this item which was not previously disclosed.~~Rule 10b5-1 Plan Adoptions and Modifications

No officers or directors entered into a 10b5-1 plan during the three months ended July 1, 2023.

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Item 6. Exhibits

Exhibit No.

Exhibit

Exhibit No.

Exhibit

10.1*

(1)

2023 Omnibus Equity Incentive Plan

31.1

(1)

Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 - Rule 13a-14(a)/15d-14(a)

31.1

(2)

Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 - Rule 13a-14(a)/15d-14(a)

31.2

(1)

Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 - Rule 13a-14(a)/15d-14(a)

31.2

(2)

Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 - Rule 13a-14(a)/15d-14(a)

(2)

Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(3)

Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS

The instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document.

101.INS

The instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document.

101.SCH

Inline XBRL Taxonomy Extension Schema Document

101.SCH

Inline XBRL Taxonomy Extension Schema Document

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

104

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

104

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

*Management Contract or Compensatory Plan, Contract or Arrangement

(1) Incorporated by reference to Exhibit 99.1 to the Registration Statement on Form S-8 filed on August 1, 2023.

(2) Filed herewith.

(3) Furnished herewith.

All other items required under Part II are omitted because they are not applicable.

~~(1) Filed herewith.~~

~~(2) Furnished herewith.~~

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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 thereunto duly authorized.


Cavco Industries, Inc.
Registrant

Signature	Title	Date

/s/ William C. Boor	Director, President and Chief Executive Officer	~~November~~August 4, ~~2022~~2023
William C. Boor	(Principal Executive Officer)

/s/ Allison K. Aden	Executive Vice President, Chief Financial Officer & Treasurer	~~November~~August 4, ~~2022~~2023
Allison K. Aden	(Principal Financial Officer)

3027


Remainder of fiscal year	$	1,003
2024	1,339
2025	1,300
2026	1,258
2027	1,185
2028	1,079
Thereafter	3,506