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Cavco Industries (CVCO) Officials Issue Several Warnings

February 6th, 2019 Comments off

 

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This report will blend three elements. One is a release to the Daily Business News on MHProNews from Cavco Industries.  Two, are select graphics and commentary. But we will begin with the following exclusive.

 

An attorney spoke off-the-record to MHProNews  one who has been tracking the drama at Cavco – said the following about Cavco’s official statements.

The second half of this, beginning with “adverse industry conditions,” is boiler plate that they’ve used before, said that attorney who is tracking developments at Cavco. “The first part is more significant.  They also note somewhere that they’ve increased their D&O (directors and officers) liability insurance coverage, which means that they’re expecting possible claims arising out of or related to the SEC matter.” 

Put in non-legalize, there is incoming fire, as the related reports linked further below the byline and notices exclusively have reflected. 

With that introduction, in a report dated 2.4, 2019, – Cavco Industries, Inc. (NASDAQ: CVCO) today announced financial results for the third fiscal quarter ended December 29, 2018.

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Financial highlights include the following:

  • “Net revenue for the third quarter of fiscal year 2019 was $233.7 million, up 5.6% from $221.4 million for the third quarter of fiscal year 2018. The increase was primarily from higher home selling prices as a result of input cost inflation and modestly larger home sizes. Net revenue for the first nine months of fiscal 2019 was $721.6 million, a 14.8% increase from $628.7 million in the same period last year. Net revenue for the three and nine months ended December 29, 2018 includes subcontracted pass-through services of $5.9 million and $18.7 million, respectively, which are now recognized on a gross basis rather than net of associated costs.”

 

  • Income before income taxes was $16.9 million for the third quarter of fiscal year 2019, a 28.7% decrease from $23.7 million in the comparable quarter last year. The current quarter’s results were impacted by the following events:”

 

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The following bullets are direct quotes, from Cavco’s release.  The graphics are from Cavco, as shown, but where not part of their press release.

 

  • The Company recorded unrealized losses of $2.1 million on corporate equity investments in Other income, net. This is the result of implementation this fiscal year of new accounting standards that require unrealized gains and losses on equity instruments to be reported on the Consolidated Statement of Comprehensive Income. In previous fiscal years, these amounts were recorded on the Consolidated Balance Sheet in the Accumulated other comprehensive income line;

 

  • Selling, general and administrative expenses included $1.3 million for legal and other expenses related to the Company’s internal investigation and response to the Securities and Exchange Commission (“SEC”) inquiry and $0.7 million of expense related to the purchase of additional Director and Officer (“D&O”) insurance, as described further below; and

 

  • Financial services results were adversely impacted by a severe hailstorm in Arizona, which resulted in increased homeowners’ insurance claims for the period. The Company’s insurance subsidiary maintains reinsurance for loss events that exceed $1.5 million, which served to limit the losses realized this quarter. The prior year quarter experienced unusually low claims volume as policy coverage areas did not have any significant weather-related events.

 

  • Further increasing the adverse quarterly comparison, income before income taxes for the prior year third fiscal quarter benefited from a $3.4 million favorable dispute settlement resolution and the production of a limited number of disaster-relief units for the Federal Emergency Management Agency.

 

Here’s what the legal beagles and shareholder’s plaintiffs attorneys are watching.

 

As a result of the ongoing independent investigation, the Company recorded $1.3 million related to legal and other expenses during the third fiscal quarter and expects to continue to incur related costs pertaining to this matter over the next several quarters. During the quarter, the Company also reviewed the sufficiency of its insurance coverage and as a result of this review, Cavco’s Board of Directors made a decision to purchase additional D&O insurance coverage. These new 22 month policies were implemented December 21, 2018. Total premiums paid for these policies were $15.3 million, of which $5.4 million was paid in the third fiscal quarter. As a result, the Company recorded $0.7 million of additional D&O policy premium expense during the third fiscal quarter, and expects to incur approximately $2.1 million per quarter in Selling, general and administrative expense from the amortization of these policy premiums through the second quarter of fiscal year 2021. Any additional adjustments are expected to be in the normal course of maintaining adequate D&O insurance for the Company.”

 

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Last night’s closing numbers, are linked here.  Note that none of MHProNews’ management have taken any position in any tracked stock.

 

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A key pull quote from a call transcript, per Seeking Alpha:

 

Some factors that may affect the company’s results include, but are not limited to, the risk of litigation or regulatory action arising from the subpoenas we received from the SEC, the risk of potential litigation or regulatory action arising from the SEC related internal investigation and its findings, potential reputational damage that Cavco may suffer as a result of matters under investigation, adverse industry conditions, our involvement in vertically integrated lines of business, including manufactured housing, consumer finance, commercial finance and insurance, market forces and housing demand fluctuations, our business and operations begin concentrated in certain geographical regions, loss of any of our executive officers, federal government shutdowns and extensive regulation affecting manufactured housing.”

 

So between the attorney that spoke off-the-record to MHProNews, and Cavco’s own official statements, there are sound reasons to believe that legal tussles lie ahead.

Their full release is linked here.

 

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MHProNews plans a more detailed dive into Cavco in the days ahead.  Stay tuned.

That’s this morning’s look at “News through the lens of manufactured homes, and factory-built housing,” © where “We Provide, You Decide.” © ## (News, analysis, and commentary.)

 

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SoheylaKovachDailyBusinessNewsMHProNewsMHLivingNewsSubmitted by Soheyla Kovach to the Daily Business News for MHProNews.com. Soheyla is a managing member of LifeStyle Factory Homes, LLC, the parent company to MHProNews, and MHLivingNews.com.

 

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“F-Bombs” Fly – Cursing Manufactured Housing and Tornadoes – Engaging Public, Experts, Officials, and Media

March 2nd, 2018 Comments off

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When you seriously engage the public on the topic of manufactured homes, perhaps especially when it involves tornado safety, you better be thick skinned. The following are examples of real comments, from real people…

 

  • “Bull-sh-t!”
  • “Mother-f-cker!”
  • “Liar!”

 

…are just some of the hundreds of posted feedback received – which have overall been a mix of good, bad and meh.  You’ll see a few recent examples of online discussions with some pretty heated accusers.

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One of the most popular manufactured home videos on YouTube is a very basic one created by MHProNews using original footage from a test conducted at Texas Tech University, with an “Air Guard” C-130 some years ago.

 

The video was our first stab at a ‘desktop’ production; and while it was okay for a first effort then, it clearly looks dated now.

 

That said, when you top 400,000 views on YouTube, that’s not bad. It is routinely at or near the top video in the search for manufactured homes and tornadoes on YouTube, as the still above illustrates. 

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It should be noted that we stick with the facts, and cite sources.  We don’t exaggerate.  Some viewers don’t read the subtext, or listen to the words in the video, and so they get a false impression. 

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Regardless, engaging with those who post comments is useful.

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One may not convert the accuser, but there are thousands who see those comments, and they have the opportunity to follow the links to MHLivingNews, and learn more from our newer videos on MHLivingNews that are hosted on commercial-freeVimeo.

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Weather Expert’s Surprising, Bombshell Statement on Tornado Deaths and Affordable Manufactured Homes

 

Take Aways, Lessons Learned

The lessons and takes ways after years of doing this are many. 

Among them?

Anyone can say they are pro-industry.  For that matter, anyone can claim anything. It’s offering evidence, that’s what matters. 

So for years on MHProNews and after we launched MHLivingNews, our operation has tried day-by-day to walk-the-talk.  As an industry CEO said, “You [MHProNews | MHLivingNews] have street cred.”

The industry’s professionals must grasp a simple reality. False or misleading claims must be debunked. 

LATonyKovachPresenting%StateConvDeadwoodSDKenCorbinCommentManufacturedHousingIndustryEventDailyBusinessNewsMHProNewsIt isn’t just our opinion, its a routine question asked during public presentations by Tony Kovach, which draws nearly universal agreement from industry professionals, at events like the one in the photo, above. 

 

Image concerns, and fear of poor quality, or the false perception of low construction standards are among the items that must be routinely responded to by credible industry voices.

It isn’t a popularity contest. Anyone can ‘cheer lead.’ 

Authentically engaging others on thorny issues has made MHProNews | MHLivingNews the runaway number one trade media for many years.  We’ve never claimed perfection.  Tony admitted recently to having been mistaken on a key topic

So, as former MHI Chairman, and 21st Mortgage Corp President and CEO Tim Williams said on-the-record, if we have a fact error, we correct it.

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To see Tim Williams’ full statement in context, click the link below. http://www.MHProNews.com/blogs/industryvoices/the-importance-and-value-of-independent-mh-trade-publications/ 

 

‘Shots Fired’ by Col George Allen, and the WHA’s Amy Bliss

In an upcoming report, blogger and award winning industry veteran “Colonel” George Allen took several shots at our publisher. They are easily debunked for those who care.

For example, Allen questioned Tony Kovach’s experience in journalism, research, and publishing.  Col. Allen may either be unaware or wanted to ignore the fact that L. A. ‘Tony’ Kovach began journalism in high school, where he was the rotating editor for his school’s newspaper.

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Some committee at the University of Oklahoma must have liked his work, because Tony was given a scholarship in Journalism. In time, he switched to history.  He was the first freshman in the university’s history to win the prestigious Lottinville Award in history.

According to the OUDaily, “According to Harlin, Lottinville is a former director of the OU Press and Regents Professor of History Emeritus. The awards are named after his late wife, Rita.“ Kovach began statewide winning awards in history in high school. There’s more, but that serves to disprove Col. Allen’s written concerns.

While we’ve not updated the statistical video posted below, those facts are all from third parties such as Webalizer and Mailchimp.

Our email list has grown substantially since the video above was produced, and continues to rise in the wake of our often controversial, but facts, documents, and accurate-quotes driven reports.

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We are not the National Enquirer, but their slogan is a fine one that applies to our industry. Inquiring minds do want to know.  Those minds are both inside and outside of our industry. You, our sources, our sponsors, and team work have made us number one.

As Tim Williams said, if there is a fact error or a differing view that one wishes to present, email us at the link to the bottom, follow the submission tips, below.

The f-bombs demonstrate that we have broad shoulders at MHProNews.  We go where the facts, documents, evidence, and quotes lead us. That’s why we invite MHI and all others to publicly discuss the issues that are important for the industry’s growth. 

This post will be updated next week with Amy Bliss and George Allen’s comments and the emails exchanged. 

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SoheylaKovachManufacturedHomeLivingNewsManufacturedHousingIndustryDailyBusinessNewsMHProNews-Submitted by Soheyla Kovach to the Daily Business News for MHProNews.com.

Soheyla is a managing member of LifeStyle Factory Homes, LLC, the parent company to MHProNews, and MHLivingNews.com.

 

 

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