PHOENIX, Ariz. — Cavco Industries Inc. has announced financial results for the third fiscal quarter ended December 30, 2017.
On April 3, 2017, the company completed the acquisition of Lexington Homes Inc., which operates a manufactured housing plant in Lexington, Mississippi. Since the acquisition date, the results from this new business are included in Cavco’s consolidated financial statements presented herein.
Financial highlights include the following:
Net revenue for the third quarter of fiscal year 2018 totaled $221.4 million, up 9.4 percent from $202.3 million for the third quarter of fiscal year 2017. Net revenue for the first nine months of fiscal 2018 was $628.7 million, up 9.2 percent from $575.8 million for the comparable prior year period. The increase was from improved home sales volume and a larger proportion of higher priced homes sold.
Income before income taxes was $23.7 million for the third quarter of fiscal year 2018, a 37.0 percent increase from $17.3 million in the comparable quarter last year. For the first nine months of fiscal 2018, income before income taxes increased 23.2 percent to $47.8 million from $38.8 million in the comparable period of the prior year. The improvements were from increased home sales volume and pricing, a $3.4 million favorable dispute settlement resolution during the third fiscal quarter, and improved earnings in the financial services segment.
Income tax expense was $2.2 million, resulting in an effective tax rate of 9.5 percent for the third quarter of fiscal year 2018 compared to $5.0 million and an effective tax rate of 28.9 percent in the same quarter of the prior year. On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the Tax Act), which made broad and complex changes to the U.S. tax code. In connection with lower federal income tax liability related to the Tax Act and revaluation of the net deferred income tax balance, the Company has recorded a net income tax benefit of $5.6 million (or $0.61 per diluted share) in the third quarter ended December 30, 2017.
For the nine months ended December 30, 2017, income tax expense was $8.5 million for an effective tax rate of 17.7%, compared to income tax expense of $11.7 million and an effective tax rate of 30.3 percent in the comparable period. In addition to the Tax Act effect benefits, income tax expense for the nine months ended December 30, 2017 also includes a tax benefit of $1.7 million, related to the company’s required implementation of Accounting Standards Update No. 2016-09, Compensation-Stock Compensation (Topic 718): Improvement to Employee Share-based Payment Accounting, which, among other items, requires the Company to record excess tax benefits on exercises of stock options as a reduction of income tax expense in the consolidated statement of comprehensive income, whereas they were previously recognized in equity.
Net income was $21.4 million for the third quarter of fiscal year 2018, compared to net income of $12.3 million in the same quarter of the prior year, a 74.0% percent increase. For the nine months ended December 30, 2017, net income was $39.4 million, up 45 percent from net income of $27.1 million for the first nine months of fiscal 2017.
Net income per share for the third quarter of fiscal 2018, based on basic and diluted weighted average shares outstanding, was $2.37 and $2.33, respectively, compared to net income per share of $1.37 and $1.35, respectively, for the comparable quarter last year. Net income per share for the nine months ended December 30, 2017, based on basic and diluted weighted average shares outstanding, was $4.36 and $4.28, respectively, versus basic and diluted net income per share of $3.02 and $2.98, respectively, for the prior nine month period.
Commenting on the quarter, Joseph Stegmayer, chairman, president and CEO said, “We are pleased with this quarter’s results which were aided by improved order rates during traditionally slower holiday months. Strong new single-family housing demand continued to drive opportunities for increased unit sales volume. In response, our manufacturing facilities raised production levels by increasing our workforce size and capabilities.”
Stegmayer continued, “The constrained labor market coupled with continued cost increases for raw materials remain key challenges to further increasing production rates and financial performance. However, our home production systems utilize labor and materials more efficiently than many other home construction alternatives. The company has the ability to raise sales prices of its home offerings in response to rising input costs, although larger-than-normal home order backlogs have caused some delay in fully realizing the benefits of higher home product pricing.”
Cavco’s management will hold a conference call to review these results tomorrow, February 7, at 1 p.m. (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.
SOURCE: Cavco Industries Inc. press release