Cavco Product Diversity - Investor Relations

Cavco Industries, Inc.
NASDAQ: CVCO
Cavco 2015
Cavco 2009
Acquisition of:
• Standard Insurance
• CountryPlace Mortgage
Inventory
Finance
Acquisition of
•
5 Factories
•
49 Retail Stores
46 Retail
Stores
6 Retail
Stores
Acquisition of
•
7 factories
3 Factories
15 Factories
Company Highlights
Cavco 2009
Cavco 2015
•
700 Employees
•
3,000 Employees
•
Serving 8 states
•
Serving 35 states, Canada & Mexico
•
$105 million revenue
•
$500+ million revenue
•
2.3% market share
•
12% market share
(HUD)
(HUD)
AND…
• Inventory financing
• Mortgage origination & servicing
• Property & casualty insurance
• Fleetwood Homes and Palm Harbor Homes
– top 2 industry brands
• Now the 2nd largest builder in US
• 5x Manufacturer of the Year – vote by peers
• #13 on Forbes Best Small Companies – 2014
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Cavco Product Diversity
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Cavco Product Diversity
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Cavco Product Diversity
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Cavco Product Diversity
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Cavco Product Diversity
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Cavco Product Diversity
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Cavco Product Diversity
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Cavco Product Diversity
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Cavco Product Diversity
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Cavco Product Diversity
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Cavco Product Diversity
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Cavco Product Diversity
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Cavco Product Diversity
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Cavco Product Diversity
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Manufactured Housing
Industry Profile
46 corporations
125 homebuilding factories
4,000 home sales centers
50,000 land-lease communities
75,000 full-time U.S. employees
In 2014-manufactured housing has accounted for
• 48% of all new homes sold under $200,000
• 70% of all new homes sold under $150,000
• 2 of every 3 manufactured homes are in rural
areas
Source: Manufactured Housing Institute.
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Manufactured Housing Industry
Profile
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64,000
60,000
55,000
52,000
50,000
82,000
118,000
147,000
131,000
169,000
193,000
251,000
349,000
50,000
50,000
96,000
100,000
131,000
150,000
373,000
363,000
353,000
304,000
254,000
211,000
171,000
188,000
198,000
200,000
218,000
250,000
233,000
300,000
245,000
350,000
283,000
400,000
340,000
Manufactured home industry – 30 year annual shipments
0
Source: Manufactured Housing Institute.
2005 includes approximately 17,000 units built for FEMA.
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Manufactured Housing Average Annual
Home Shipments
Since HUD code adopted 1976
214,000
20 year average 1995-2014
171,000
10 year average 2005-2014
77,000
5 year average
56,000
2005-2014
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Manufactured Home Shipments as a percent of
New Single-Family Home Sales
30%
28.7%
Sub-prime boom for
site built Housing
25%
20%
15%
10%
17.5%
14.4%
12.9%
12.7%
14.4%
13.4%
10.3%
12.3%
11.7%
10.1% 11%
10.8%9.8%
14.7%
5%
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Cavco Factory-Built Housing Segment
Revenue Potential correlated to
Cavco
Housing
140,000
Segment
Revenue
Potential
120,000
single-family home sales and
manufactured-home industry sales
$486m
$600m
$700m
$800m
$900m
$1B
Industry
125,000
Cavco
21,000
Industry
110,000
Cavco
19,000
Industry
100,000
Cavco
17,000
Industry
Cavco
14,000
Industry
75,000
Cavco
Industry
12,000
20,000
60,210
40,000
9,537
60,000
Cavco
80,000
85,000
Potential Home Sales
100,000
0
429,000
FY2014A
600,000
700,000
800,000
900,000 1,000,000
New Single Family Home Sales
Assumptions: Cavco market share held constant
Manufactured housing share of new home sales held constant
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Challenges
 Consumer confidence
 Unemployment and underemployment
 Financing availability, lack of secondary market
Economic Headwinds Diminishing
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Critical component of U.S. housing needs
 Affordable housing
◦ Most affordable form of home ownership
◦ Ownership at monthly cost comparable to apartment rents
◦ Average retail sales price approximately $66,000 (home only)
 Custom and larger homes at better value than site built
◦ Rising raw material costs
◦ More efficient production process
◦ Precision built, with three layers of quality oversight nationally
administered by HUD
 Rural housing, communities and urban in-fill
◦ Cost-effective construction process
◦ Faster production through controlled building environment
 Green and alternative energy homes
◦ Rising energy costs
◦ Energy efficient materials and designs
Manufactured Housing Market
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Large and diverse markets
 First-time home buyers
 First move-up buyers
 Immigrants
 Baby boomers, empty nesters, and retirees
◦ Lifestyle oriented homebuyers – age-restricted
communities
 Second home and seasonal living
◦ Attractively priced, low maintenance alternative to onsite construction
Manufactured Home Owners
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U.S. Demographic Indicators
US adult population estimated to expand by 12 million
between 2015 and 2020
Home ownership rises with age
◦ Over 75% of the population age 55+ are home
owners
◦ Population of 55+ projected to increase 26% from
2015-2030
Gen Y (age 18-39) will approximate 96 million in 2015
◦ Late-stage Gen Y in peak household formation and
home-buying years
Favorable Demographic Trends
Source:
World Bank and U.S. Census Bureau
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The two largest and fastest growing demographics are
prime buyers of manufactured homes
 51 to 69 year olds (Baby Boom)
 21 to 35 year olds (Echo Boom)
Baby Boom
1946-1964
4.5
Births
(millions)
Echo Boom
1980-1994
4
3.5
3
1946
1949
1952
1955
1958
1961
1964
1967
1970
1973
1976
1979
1982
1985
1988
1991
1994
2.5
U.S. Birth Rates
Source: Census Bureau
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o
o
o
Solid balance sheet and liquidity position
o $0 operations debt
o $92 million in cash and equivalents at 12/27/14
No significant land investment reducing capital
requirements/risk
Well positioned in affordable housing market
o
Geographic growth opportunities via acquisition or internal
expansion
o
Demonstrated ability to adjust to market conditions: profitable
in all but one year during entire housing/economic downturn
o
o
Substantial sales growth with modest capital spending
Considerable operating and financial leverage as Cavco
is currently profitable at only 50% utilization of
capacity
NASDAQ symbol: CVCO
Investment Considerations
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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; our ability to successfully
integrate Fleetwood Homes, Palm Harbor, CountryPlace, Standard Casualty and any future acquisition or attain
the anticipated benefits of such acquisition; the risk that past acquisitions and any future acquisition may
adversely impact our liquidity; entry into new lines of business, namely manufactured housing consumer finance
and insurance; a constrained consumer financing market; curtailment of available financing for retailers in the
manufactured housing industry; our participation in certain wholesale and retail financing programs for the
purchase of our products by industry distributors and consumers may expose us to additional risk of credit loss;
significant warranty and construction defect claims; our contingent repurchase obligations related to wholesale
financing; market forces and declining housing demand; net losses in certain prior periods can be no assurance
that we will generate income in the future; a write-off of all or part of our goodwill; the cyclical and seasonal
nature of our business; limitations on our ability to raise capital; competition; our ability to maintain relationships
with independent distributors; our business and operations being concentrated in certain geographic regions; labor
shortages; pricing and availability of raw materials; unfavorable zoning ordinances; loss of any of our executive
officers; organizational document provisions delaying or making a change in control more difficult; volatility of
stock price; general deterioration in economic conditions and continued turmoil in the credit markets; increased
costs of healthcare benefits for employees; governmental and regulatory disruption; information technology
failures and data security breaches; 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 2014
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.
Forward Looking Statements
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