Cavco Industries, Inc. : Cavco Industries Reports Fiscal Third Quarter Results

02/02/2012 | 05:30pm
For additional information, contact:

N e w s R e l e a s e

Joseph Stegmayer Chairman and CEO Phone: 602-256-6263 joes@cavco.com

On the Internet:

www.cavco.com

FOR IMMEDIATE RELEASE

CAVCO INDUSTRIES REPORTS FISCAL THIRD QUARTER RESULTS

PHOENIX, February 2, 2012 - Cavco Industries, Inc. (NASDAQ: CVCO) today announced financial results for the third quarter and first nine months of its fiscal year 2012 ended December 31, 2011.

Net sales for the third quarter of fiscal 2012 totaled $114,564,000, up 189% from $39,612,000 for the third quarter of fiscal year 2011.

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 $83,900,000. The results of the Palm Harbor operations have been included in Cavco's Consolidated Financial Statements since acquisition.

Net income for the fiscal 2012 third quarter was $2,980,000, 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 $1,677,000 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 $0.24, versus basic and diluted net income of four-tenths of one cent per share last year.

For the first nine months of fiscal 2012, net sales increased 158% to $343,553,000 from $133,005,000 for the comparable prior year period. Net income for the first nine months of fiscal 2012 was $26,840,000 compared to

$2,339,000 for the prior year period. Included in net income for the nine months ended December 31, 2011 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 the first nine months of fiscal

2012 was $13,584,000 compared to $1,222,000 last year. For the nine months ended December 31, 2011, net income per share based on basic and diluted weighted average shares outstanding was $1.98 and $1.96, respectively, versus $0.19 and

$0.18 for the prior year period, respectively. Net income attributable to Cavco stockholders for the nine months ended

December 31, 2011 includes one half of the bargain purchase gain recognized, consistent with Cavco's ownership percentage of Fleetwood Homes.

Referring to the fiscal third quarter financial results, Joseph Stegmayer, Chairman, President and Chief Executive Officer said, "The substantial increase in net sales compared to the same quarter in the prior year was primarily from this fiscal year's addition of the Palm Harbor businesses, partially offset by seasonally slow home sales as we entered the winter months. Although backlogs were low at the end of the quarter, we look forward to the prospect of improvement in the latter part of the fourth quarter as the spring selling season begins. However, economic and housing headlines highlighting the state of consumer confidence, unemployment, and housing finance issues serve as reminders that the ongoing challenges to our industry persist."

"During the quarter, our people remained focused on the execution of strategic objectives intended to strengthen the Company's competitive positions and our capabilities to pursue an increasing variety of sales opportunities. We were particularly pleased with the ongoing business integration process since the Palm Harbor transaction earlier in the fiscal year. The Company began to realize some benefits from the collaboration of our manufacturing and retail business units. The financial services segment also continued to assimilate with the larger organization as well as develop business growth opportunities in diverse markets with niche products and services," Mr. Stegmayer concluded.

Cavco's senior management will hold a conference call to review these results tomorrow, February 3, 2012, at

11:00 AM (Eastern Time). Interested parties can access a live webcast of the conference call on the Internet at www.cavco.com under the Investor Relations link. An archive of the webcast and presentation will be available for 90 days at www.cavco.com under the Investor Relations link.

Cavco Industries, Inc., headquartered in Phoenix, Arizona, designs and produces factory-built housing products primarily distributed through a network of independent and company-owned retailers. We are the second largest producer of HUD code manufactured homes in the United States, based on reported wholesale shipments, marketed under a variety of brand names including Cavco Homes, Fleetwood Homes and Palm Harbor Homes. The Company is also a leading producer of park model homes, vacation cabins, and systems-built commercial structures, as well as modular homes built primarily under the Nationwide Homes brand. Our mortgage subsidiary, CountryPlace, is an approved Fannie Mae and Ginnie Mae seller/servicer and offers conforming mortgages to purchasers of factory-built and site-built homes. Our insurance subsidiary, Standard, provides property and casualty insurance to owners of manufactured homes.

Certain statements contained in this release are forward-looking statements within the meaning of Section

27A of the Securities Act of 1933, Section 21E of the Securities and Exchange Act of 1934 and the Private Securities

Litigation Reform Act of 1995. In general, all statements that are not historical in nature are forward-looking. Forward-looking statements are typically included, for example, in discussions regarding the manufactured housing and site-built housing industries; our financial performance and operating results; and the expected effect of certain risks and uncertainties on our business, financial condition and results of operations. All forward-looking statements are subject to risks and uncertainties, many of which are beyond our control. As a result, our actual results or performance may differ materially from anticipated results or performance. Factors that could cause such differences to occur include, but are not limited to: adverse industry conditions; general deterioration in economic conditions and continued turmoil in the credit markets; a write-off of all or part of our goodwill, which could adversely affect operating results and net worth; the cyclical and seasonal nature of our business; limitations on our ability to raise capital; curtailment of available financing in the manufactured housing industry; our contingent repurchase obligations related to wholesale financing; competition; our ability to maintain relationships with retailers; labor shortages; pricing and availability of raw materials; unfavorable zoning ordinances; our ability to successfully integrate Fleetwood Homes, Palm Harbor, and any future acquisition or attain the anticipated benefits of such acquisition; the risk that the acquisition of Fleetwood Homes, Palm Harbor, and any future acquisition may adversely impact our liquidity; expansion of retail and manufacturing businesses and entry into new lines of business, namely manufactured housing consumer finance and insurance, through the Palm Harbor transaction; our participation in certain wholesale financing programs for the purchase of our products by industry retailers may expose us to additional risk of credit loss; together with all of the other risks described in our filings with the Securities and Exchange Commission. Readers are specifically referred to the Risk Factors described in Item 1A of the 2011 Form 10-K, as may be amended from time to time, which identify important risks that could cause actual results to differ from those contained in the forward-looking statements. Cavco expressly disclaims any obligation to update any forward-looking statements contained in this release, whether as a result of new information, future events or otherwise. Investors should not place any reliance on any such forward-looking statements.

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CAVCO INDUSTRIES, INC. CONSOLIDATED BALANCE SHEETS (Dollars in thousands) AS S ETS

Current as s ets :
December 31, March 31,
2011 2011 (Unaudited)
Cas h and cas h equivalents
$ 35,397
$ 76,513
Res tricted cas h, current 6,271 436
Accounts receivable, net 12,928 6,571
Short-term inves tments 5,121 - Current portion of cons umer loans receivable, net 21,619 - Inventories 62,334 16,036
As s ets held for s ale 5,285 - Prepaid expens es and other current as s ets 7,919 2,495
Debtor-in-pos s es s ion note receivable - 40,060
Deferred income taxes 5,860 4,720
Total current as s ets 162,734 146,831
Res tricted cas h 452 - Inves tments 9,626 - Cons umer loans receivable, net 101,578 - Inventory finance notes receivable, net 21,328 17,759
Property, plant and equipment, net 50,698 35,993
Goodwill and other intangibles , net 81,587 68,859
Total as s ets

LIABILITIES AND S TOCKHOLDERS ' EQUITY

Current liabilities : Accounts payable
$ 428,003
$ 8,421
$ 269,442
$ 3,495
Accrued liabilities 54,864 26,245
Cons truction lending lines 5,599 - Current portion of s ecuritized financings 10,797 - Noncontrolling interes t note payable - 36,000
Total current liabilities 79,681 65,740
Securitized financings 83,376 - Deferred income taxes 13,327 17,214
Redeemable noncontrolling interes t 85,228 35,819
Stockholders ' equity:
Preferred s tock, $.01 par value; 1,000,000 s hares authorized;
No s hares is s ued or outs tanding - - Common s tock, $.01 par value; 20,000,000 s hares authorized;
Outs tanding 6,890,796 and 6,817,606 s hares , res pectively 69 68
Additional paid-in capital 131,368 129,211
Retained earnings 34,974 21,390
Accumulated other comprehens ive los s (20) - Total s tockholders ' equity 166,391 150,669
Total liabilities , redeemable noncontrolling interes t and
s tockholders ' equity
$ 428,003
$ 269,442

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CAVCO INDUSTRIES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except per share amounts) (Unaudited)

Three Months Ended Nine Months Ended

December 31, December 31,

2011 2010

Net sales

$ 114,564

$ 39,612

Cost of sales 87,642 34,269

Gross profit 26,922 5,343 71,310 18,963

Selling, general and administrative expenses 20,535 5,275 59,113 16,000

Income from operations 6,387 68 12,197 2,963

Interest expense (2,043) - (5,420) - Other income 440 511 1,055 957

Gain on bargain purchase - - 22,009 - Income before income taxes 4,784 579 29,841 3,920

Income tax expense (1,804) (289) (3,001) (1,581)

Net income 2,980 290 26,840 2,339

Less: net income attributable to redeemable

noncontrolling interest 1,303 266 13,256 1,117

Net income attributable to Cavco

common stockholders

$ 1,677 $

24 $

13,584

$ 1,222

Net income per share attributable to Cavco common stockholders:

Basic

$ 0.24 $

0.00

$ 1.98

$ 0.19

Diluted

$ 0.24

$ 0.00

$ 1.96

$ 0.18

Weighted average shares outstanding:

Basic	6,890,517		6,651,928		6,873,078		6,578,732
Diluted	6,951,958		6,841,802		6,936,054		6,860,385

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CAVCO INDUSTRIES, INC. OTHER OPERATING DATA (Dollars in thousands) (Unaudited)

Net s ales :
Three Months Ended Nine Months Ended
December 31, December 31,
2011 2010 2011 2010
Factory-built hous ing
$ 104,931
$ 39,612
$ 317,457
$ 133,005
Financial s ervices 9,633 - 26,096 -

Total net s ales	$ 114,564		$ 39,612		$ 343,553		$ 133,005
Capital expenditures	$ 434		$ 221		$ 2,273		$ 680
Depreciation	$ 602		$ 331		$ 1,667		$ 984
Amortization of other intangibles	$ 880		$ 14		$ 2,566		$ 40
Factory-built homes s old: by Company owned s tores	437		24		1,357		91
to independent dealers , builders & developers	1,535		1,115		4,613		3,600
Total factory-built homes s old	1,972		1,139		5,970		3,691

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