Cavco Reports Drop in Sales, Earnings For 2Q

Cavco Industries Inc. today (Nov. 1) announced financial results for the second quarter and first six months ended Sept. 30, of its fiscal year 2013.

Net sales for the second quarter of fiscal 2013 totaled $110 million, down 15.3% from $130 million for the second quarter of fiscal year 2012. Net income for the fiscal 2013 second quarter was $2.7 million compared to $3.2 million reported in the same quarter one year ago.

Net income per share based on basic and diluted weighted average shares outstanding for the quarter was 18 cents, versus basic and diluted net income per share the previous year of 24 cents.

For the first six months of fiscal 2013, net sales totaled $228.8 million versus $229 million for the comparable prior year period. Net income for the first half of fiscal 2013 was $2.1 million compared to $11.9 million last year. Net income for the six months ended Sept. 30, 2011, included one-half (or approximately $11 million) of the bargain purchase gain recognized from the Palm Harbor transaction, which closed on April 23, 2011. This bargain purchase gain allocation was consistent with Cavco’s ownership percentage of Palm Harbor.

For the six months ended Sept. 30, 2012, net income per share based on basic and diluted weighted average shares outstanding was 30 cents versus basic and diluted net income per share of $1.73 and $1.72, respectively, for the prior year period.

Referring to the fiscal 2013 second quarter results, Joseph Stegmayer, chairman, president and CEO, said, “Net sales were lower for the second quarter of fiscal year 2013 compared to the same quarter in the prior year for various reasons. These include fewer homes sold this quarter, lower average sales prices from a product mix skewed toward lower price-point homes, and competitive pricing pressures. Adversely impacting the number of homes sold was a larger proportion of internally financed wholesale sales, up 49.8% this quarter versus the second quarter last year, resulting in delayed recognition of the related revenue, consistent with applicable accounting principles. The company also modestly grew the proportion of factory sales to company-owned stores, which defers revenue recognition until the home sale process to the consumer is complete.”

 

Cavco, Champion Battling in Copyright Dispute

Champion Home Builders Inc. has filed a countersuit in a copyright dispute with Cavco Industries Inc. and PHH Liquidation Trust Inc.

Phoenix-based Cavco, which builds manufactured homes and RVs, and its Palm Harbor Homes division filed the initial copyright suit in U.S. Federal Court against Champion, claiming Champion violated the copyright law and misappropriated trade secrets regarding manufactured home designs and floorplans.

Joseph Kesterson, a resident of Denton County, Texas, who formerly worked at Palm Harbor Homes and now works for Champion, is also a plaintiff in the countersuit.

In a countersuit filed Sept. 7 in U.S. Federal Court in Sherman, Texas, Troy, Mich.-based Champion and Kesterson deny they violated the copyright law.

Moreover, plaintiffs deny that the designs and floorplans at issue constitute copyrightable work. They seek a declaratory judgment in their favor. They also seek a judgment that the designs and floorplans are not copyrightable material of the defendants.

The case was assigned to Magistrate Judge Amos L. Mazzant.

California KOA to Begin Selling ‘Deluxe Cabins’

Through a new partnership with Cavco Industries Inc. and Reliable Home Solutions, the Stockton Delta KOA will begin selling park model cabins at its site in Lido, Calif. According to a press release, a dozen units are currently being sold at prices ranging from the mid-$40,000 to the mid-$60,000 range.

The Stockton Delta KOA is the first KOA campground in the western United States to sell the new Deluxe Cabins. “We think they’re going to sell like hotcakes,” said Scott Haar, general manager of the 400-site Stockton KOA.

“Having a vacation cottage at the Stockton KOA is going to be very attractive for people who are looking for affordable ways to have a weekend getaway cabin or vacation cottage,” added Gene Davis, president of Sacramento-based Reliable Home Solutions, which is marketing the units on behalf of KOA and Cavco.

The 400-square-foot park models are manufactured by Phoenix-based Cavco, which has been building park model cabins and cottages for use as private vacation cottages in campgrounds for nearly 20 years.

While park models have been used as vacation cottages in campgrounds throughout much of Arizona, Texas and Florida as well as the Midwest and East Coast regions, they are just now being introduced in campgrounds in the West, and even then mostly as rental accommodations.

“We think the market is ready for this,” Davis said, adding that people are already bringing their friends to see the demonstration park model that was recently set up at the Stockton KOA.

Consumers who purchase the units will also need to pay a lease fee to keep their units at the KOA. Annual site lease costs range from $900 to $1,900 for the first year, but will jump to $3,960 to $5,400 for each year thereafter, Haar said, adding that the rent will include water, sewer, Wi-Fi and trash pickup as well as security at the park.

The Stockton KOA has 400 campsites, including 21 Deluxe Cabins and three Airstream trailers.

For more information about Stockton KOA, visit www.stocktonkoa.com.

 

Cavco More Than Doubles Q4, FY ’12 Sales

Cavco Industries Inc. announced on Tuesday (May 29) financial results for the fourth quarter and fiscal year ended March 31, 2012.

Net sales for the fourth quarter of fiscal 2012 totaled $99,513,000, up 156% from $38,822,000 for the fourth quarter of fiscal year 2011, according to a news release.

As previously reported, 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 Inc. during the quarter ended June 30, 2011. The results of these new operations have been included in Cavco’s Consolidated Financial Statements since acquisition. Palm Harbor Homes Inc. had been in the business of manufacturing and marketing factory-built housing and providing related consumer financing and insurance products. The aggregate gross purchase price, exclusive of transaction costs, specified liabilities assumed and post-closing adjustments, was $83,900,000.

Net income for the fiscal 2012 fourth quarter was $2,888,000, compared to $1,733,000 reported in the same quarter one year ago. Net income attributable to Cavco stockholders for the fiscal 2012 fourth quarter was $1,653,000 compared to $1,609,000 reported in the same quarter one year ago.

During the fiscal 2012 fourth quarter, the company made an election pursuant to section 338(h)(10) of the Internal Revenue Code, allowing the company to step up the tax basis of the Palm Harbor insurance group’s assets to fair value. This election offset income tax expense by $1,241,000, resulting in a net tax benefit of $502,000 for the company in the quarter. Net income per share attributable to Cavco stockholders based on basic and diluted weighted average shares outstanding was $0.24 for the fiscal 2012 fourth quarter, versus basic and diluted net income per share of $0.24 and $0.23 in last year’s fourth quarter, respectively. Net income attributable to Cavco stockholders for the quarter ended March 31, 2012, includes one half of the $1,241,000 tax benefit from this election, consistent with Cavco’s ownership percentage of Fleetwood Homes.

For the fiscal year ended March 31, 2012, net sales increased 158% to $443,066,000 from $171,827,000 for fiscal year 2011. Net income for fiscal year 2012 was $29,728,000 compared to $4,072,000 for the prior year. Included in net income for fiscal 2012 was a gain on bargain purchase of $22,009,000 resulting from the Palm Harbor transaction, calculated in accordance with the accounting standards for business combinations.

Net income attributable to Cavco stockholders for fiscal 2012 was $15,237,000 compared to $2,831,000 last year. For the fiscal year ended March 31, 2012, net income per share based on basic and diluted weighted average shares outstanding was $2.22 and $2.19, respectively, versus $0.43 and $0.41 for the prior year, respectively. Net income attributable to Cavco stockholders for the fiscal year ended March 31, 2012, includes one half of the bargain purchase gain recognized, consistent with Cavco’s ownership percentage of Fleetwood Homes.

Commenting on the final quarter of fiscal year 2012, Joseph Stegmayer, chairman, president and CEO, said, “The company’s fourth quarter financial results were positive in light of the ongoing economic challenges affecting the homebuilding industry. Home sales were adversely impacted this quarter by seasonally slow winter home buying activity; however, we began to see some modest improvement in consumer interest and traffic levels at the end of the quarter. The financial services segment continued to provide sound mortgage and insurance products while being a strong contributor to our fourth quarter profitability during these difficult times.”

Stegmayer continued, “Current economic and market headwinds including low consumer confidence levels, high unemployment rates, significant underemployment, and strict mortgage underwriting standards have not changed our optimistic long-term perspective. Cavco has accomplished a strategically eventful fiscal year in which the company grew considerably in size as well as in capability. The Palm Harbor transaction this year expanded the geographic reach of the company as well as the diversity of our home products and provided the introduction of related mortgage and insurance business lines. With the fiscal 2012 Palm Harbor and fiscal 2010 Fleetwood Homes asset purchases, our company is better situated to operate in the current environment and well positioned to benefit as the economy begins to improve.”

Cavco’s management will hold a conference call to review these results today (May 30) at noon (Eastern Time). Interested parties can access a live webcast of the conference call on the Internet at www.cavco.com under the Investor Relations link. An archive of the webcast and presentation will be available for 90 days at www.cavco.com under the Investor Relations link.

 

 

Oil and Gas Boom Lifts Fleetwood Homes Sales

Editor’s Note: The following is an excerpt from a Wall Street Journal story looking at the oil and gas boom and the resulting boost for the economy, including a lift in production at Fleetwood Homes, a subsidiary of Cavco Industries Inc. To view the entire article click here.

The staccato of nail guns echoes across a cavernous building as workers for Nampa, Idaho-based Fleetwood Homes piece together manufactured houses with easy-to-clean linoleum floors and rugged interiors for muddy oil-field workers.

There is no oil and gas production in Idaho, but that doesn’t mean the U.S. energy boom has bypassed this bedroom community west of Boise. Fleetwood Homes, a subsidiary of Cavco Industries Inc., has increased production by 25% since last fall at its Nampa factory, hiring 40 workers and adding hours for employees. It is building the extra-insulated “Dakota” model for shipment 1,000 miles east to the Bakken oil field in North Dakota.

Were it not for the new demand for oil-field housing, factory manager Jeff Chrisman says he would be handing out furloughs, not overtime. Instead, “We’ve been able to bring back people that we hated losing a couple of years ago,” he says.

An energy boom is revving up the U.S. economy. The use of new drilling techniques to tap oil and gas in shale rocks far underground helped add about 158,500 new oil and gas jobs over the past five years, and economists think it has created even more jobs in companies supplying the energy industry and in the broader service industry. U.S. oil production is rising for the first time in decades. Natural gas has become so plentiful that prices recently plunged to a 10-year low.

“This is probably the biggest stimulus we have going,” says Michael Lynch, president of Strategic Energy & Economic Research, a consultant based in Amherst, Mass. Some $145 billion will be spent drilling and completing U.S. wells this year, up from $13 billion in 2000, estimates Spears & Associates Inc., an oil-field market research firm.

Chrisman said he had no clue about the energy boom until he received a call from a planned 300-unit housing development in Williston, N.D. He traveled there in 2010 and saw well-paid workers sleeping in their cars in a local Wal-Mart parking lot during winter because of the lack of housing.

As the factory’s pace of production began picking up last summer, Mr. Chrisman rehired workers he had let go amid the housing downturn. Shannon Smith returned to her job caulking tiles and cleaning up the houses before they are loaded onto trucks.

“In the two years I was laid off, we lost our house” and racked up a lot of credit-card debt, says Ms. Smith, a mother of two. “There was no money and nothing to do. This is chance to buy groceries again and keep paying the bills.”

Though she has never seen an oil well, Smith says, “I hope it keeps coming.”

 

Palm Harbor Acquisition Boosts Cavco’s Sales

Cavco Industries Inc. reported a 189% increase in sales for its third quarter, ended Dec. 31, buoyed by a major acquisition.

Net sales for the third quarter of fiscal 2012 totaled $114.6 million compared with $39.6 million the year prior. As previously reported, 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 Inc. during the quarter ended June 30, 2011.

Palm Harbor had been in the business of manufacturing and marketing factory-built housing and providing related consumer financing and insurance products. The aggregate gross purchase price, exclusive of transaction costs, specified liabilities assumed and post-closing adjustments, was $83.9 million. The results of the Palm Harbor operations have been included in Cavco’s financial statements since acquisition.

Net income for the fiscal 2012 third quarter was nearly $3 million compared to $290,000 reported in the same quarter one year ago. Net income attributable to Cavco stockholders for the fiscal 2012 third quarter was $1.7 million compared to $24,000 reported in the same quarter one year ago. Net income per share based on basic and diluted weighted average shares outstanding was 24 cents, versus basic and diluted net income of four-tenths of one cent per share last year.

For the first nine months of fiscal 2012, sales increased 158% to $343.5 million from $133 million for the comparable prior year period. Net income for the first nine months of fiscal 2012 was $26.8 million compared to $2.3 million for the prior year period. Included in net income for the nine months was a gain on bargain purchase of $22 million resulting from the Palm Harbor transaction, calculated in accordance with the accounting standards for business combinations.

 

 

Palm Harbor Acquisition Boosts Cavco Profits

Cavco Industries Inc. today (Nov. 3) announced financial results for the second quarter and first six months of its fiscal year 2012 ended Sept. 30.

Net sales for the second quarter of fiscal 2012 totaled $130 million, up 183% from $45.9 million for the second quarter of fiscal year 2011, according to a news release.

As previously reported, Fleetwood Homes Inc., a subsidiary owned 50% by Cavco and 50% by Third Avenue Value Fund (TAVFX), completed the acquisition of substantially all of the assets and assumption of certain liabilities of Palm Harbor Homes Inc. during the quarter ended June 30, 2011.

Palm Harbor had been in the business of manufacturing and marketing factory-built housing and providing related consumer financing and insurance products. The aggregate gross purchase price, exclusive of transaction costs, specified liabilities assumed and post-closing adjustments, was $83.9. The results of the Palm Harbor operations have been included in the consolidated financial statements since acquisition.

Net income for the fiscal 2012 second quarter was $3.2 million compared to $1.2 million reported in the same quarter one year ago. During the quarter, the company incurred $120,000 in acquisition-related costs for the purchase of the Palm Harbor Homes assets and expects to have additional transaction-related expenses during the remainder of fiscal year 2012.

“We are glad to report positive earnings for the second quarter of fiscal year 2012. Cavco benefited from higher order rates during the quarter, which translated into improved results compared to recent quarters and demonstrates the operating leverage we believe exists in the Cavco group of companies,” said Joseph Stegmayer, chairman, president and CEO, while commenting on the quarter.

Interest expense of $1,916,000 was recognized during the second quarter of fiscal 2012, 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 second quarter was $1.6 million compared to $680,000 reported in the same quarter one year ago. Net income per share based on basic and diluted weighted average shares outstanding was 24 cents versus basic and diluted net income per share of 10 cents last year.

For the first six months of fiscal 2012, net sales increased 145% to nearly $229 million from $93.4 million for the comparable prior year period. Net income for the first half of fiscal 2012 was $23.8 million compared to $2 million last year. Included in net income for the six months ended Sept. 30, 2011, was a gain on bargain purchase of $22 million resulting from the acquisition of Palm Harbor, as adjusted during the fiscal 2012 second quarter and calculated in accordance with the accounting standards for business combinations.

 

 

Cavco Grows Manufacturing, Marketing Reach

Until recently, Cavco Industries Inc.’s marketing reach was largely confined to the Western half of the United States, with most of its park model sales occurring within a few hundred miles of its factory in Phoenix.

According to a press release, it wasn’t until 2006 that Cavco opened a factory in Texas, which gave it access to the Texas market.

But with its recent acquisitions of Fleetwood Homes and Palm Harbor Homes, Cavco said it now has more production facilities than any other company in the park model business.

“It gives us a strategic advantage,” said Joseph Stegmayer, Cavco’s president and CEO, “because having multiple facilities lowers the freight costs for campground operators who purchase Cavco park models.”

Cavco’s Rocky Mount, Va., factory was the first to broaden its product lines to include park models, which it did last year. This year, however, Cavco is also producing park models in Woodburn, Ore., Napa, Idaho, Austin, Texas, and Plant City, Fla.

Combine the multiple factory locations with Cavco’s increasing innovations

in park model designs, which now include off-grid solar-power park models and custom designed units for Kampgrounds of America (KOA) and other companies, and it’s easy to see how Cavco has managed to achieve at least modest sales growth at a time in which most companies continue to struggle with the recession.

“I think we have to be somewhat cautious given the economy overall,” Stegmayer said. “But there are a lot of positives to our park model cabins. There’s the lower price points, the affordability aspect. We’re also willing to try anything. We’ve done a lot of prototyping of various units, not only in the campground arena, but in the dealer arena, and that helps us a lot. It helps us bolster our reputation for being very flexible, very creative.”

This has helped Cavco increase its business with KOA, which holds its annual convention in Las Vegas next week. It also enables the company to participate in upcoming tradeshows elsewhere in the country, including the Recreation Vehicle Industry Association’s (RVIA) National RV Trade Show, which takes place Nov. 29 to Dec. 1 in Louisville, Ky., and the Outdoor Hospital Convention and Tradeshow, which the National Association of RV Parks and Campgrounds (ARVC) is hosting in Savannah, Ga., from Nov. 29 to Dec. 2. Cavco will also showcase its park models at the Tampa RV Show, which is slated for Jan. 10.

And while Cavco has derived much of its park model business from campgrounds the past couple of years, the company is also seeing renewed signs of interest from consumers who want to purchase a park model and have it set up in a campground for use as a weekend retreat or vacation cottage.

“It’s a much lower investment than investing in a second home or condo or even a large RV,” Stegmayer said.

For more information on Cavco’s park model products, visit www.cavcoparkhomes.com.

 

 

 

 

 

 

 

 

 

 

 

 

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.”

 

Cavco Virginia Factory Offers New Product Mix

Cavco Industries Inc.’s acquisition of a Fleetwood factory in southern Virginia is playing an increasingly important role in the company’s market strategy by manufacturing a diverse mix of manufactured and park models for a growing dealer base.

According to a press release, before Phoenix, Ariz.-based Cavco acquired Fleetwood’s housing division two years ago, the Rocky Mount factory only built HUD-code homes, as it had since 1968.

But with the Cavco acquisition, the factory’s product mix now includes not only Fleetwood-brand manufactured homes, but Cavco’s own lines of manufactured homes as well as park models.

“We’re pleased with the progress we’ve been making,” said Tom Satterwhite, general manager of the Rocky Mount factory, which employs 60 people.

“We’re happy, too, because the Rocky Mount facility gives us a strategic market reach we didn’t have before,” said Tim Gage, vice president of Cavco’s specialty division, noting the company now has improved access to the Northeast and Mid-Atlantic states because expensive trucking costs have been eliminated.

In addition to manufactured housing, the plant is producing several new park model lines. The Rocky Mount factory initially produced custom-designed park model cabins for campgrounds affiliated with Kampgrounds of America Inc. (KOA). But now the facility builds both cabins and traditional vinyl sided park models for a growing number of independently owned and operated parks as well as KOA-brand campgrounds throughout the Eastern U.S.

Cavco said the factory is also opening up new distribution channels for park models, both through street dealers and at campgrounds that want to sell the products to consumers as weekend retreats or vacation cottages.

“We’re constantly becoming stronger and getting more distribution and more retail turns on our product,” Satterwhite said.

The company said it is also developing growing number of sales leads through its websites and by participating in a growing number of tradeshows, such as the upcoming Pennsylvania RV and Camping Show, which is scheduled Sept. 14-18 in Hershey Pa., the National RV Tradeshow scheduled for Nov. 29 to Dec. 1 in Louisville, Ky., along with North Carolina RV shows in Charlotte, Greensboro and Raleigh.

For more information on products available through the Rocky Mount factory, please visit www.cavcoparkhomes.com and www.fleetwoodhomes.com.

 

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