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Palm Harbor Purchase Aids Cavco 1Q Results

Cavco Industries Inc., a builder of manufactured housing and park models based in Phoenix, reported financial results for the first quarter of fiscal 2012 ending June 30.

Net sales for the first quarter of fiscal 2012 totaled $98,981,000, up 108% from $47,505,000 for the first quarter of fiscal year 2011.

Net income for the fiscal 2012 first quarter was $17.45 million compared to $850,000 reported in the same quarter one year ago. Included in net income for the quarter was a gain on bargain purchase of $18,8 million resulting from the acquisition of Palm Harbor Inc. Fleetwood Homes Inc., a subsidiary owned 50% by Cavco and 50% by Third Avenue Value Fund, completed the acquisition of substantially all of the assets and assumption of certain liabilities of Palm Harbor Homes on April 23, 2011. Palm Harbor had been in the business of manufacturing and marketing factory-built housing and providing related consumer financing and insurance products.

During the quarter, Cavco incurred $744,000 in acquisition related costs for the purchase of the Palm Harbor Homes assets. It expects to have additional transaction-related expenses during fiscal year 2012. Interest expense of $1,461,000 was recognized during the first quarter of fiscal 2012 since April 23, 2011, primarily related to securitized financings and a mortgage construction lending facility of the finance subsidiaries acquired.

Net income attributable to Cavco stockholders for the fiscal 2012 first quarter was $8.6 million compared to $518,000 reported in the same quarter one year ago. Net income per share based on basic and diluted weighted average shares outstanding was $1.26 and $1.25, respectively, versus basic and diluted net income per share of $0.08 last year.

Referring to the first fiscal quarter, Joseph Stegmayer, chairman, president and CEO, commented, “During this eventful quarter, we closed on the Palm Harbor transaction and continued the associated operations under their new ownership structure. The Palm Harbor businesses are in the process of transition and have already demonstrated resilience post-bankruptcy. Certain streamlining actions have taken place which should improve operating efficiencies and financial performance over time. Work will continue during the next several quarters to integrate the Palm Harbor retail, manufacturing, finance and insurance lines of business for the overall benefit of the Cavco group of companies.”

“With respect to marketplace conditions, general economic challenges, including low consumer confidence levels, unemployment and underemployment, overall housing sector weakness, and restricted mortgage loan markets continue to impede new home sales activity, even in the affordable housing market in which we operate. However, we believe Cavco’s strategic initiatives during the past two years, including the Fleetwood Homes and Palm Harbor transactions, improve our ability to pursue existing demand while better positioning us to take advantage of future opportunities.”


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