Forward-Looking Statements
This Annual Report includes "forward-looking statements," within the meaning of
Section 27A of the Securities Act of 1933, as amended, Section 21E of the
Exchange Act and the Private Securities Litigation Reform Act of 1995. In
general, all statements included or incorporated in this Annual Report that are
not historical in nature are forward-looking. These may include statements about
the Company's plans, strategies and prospects under the headings "Business," and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations." Forward-looking statements are often characterized by the use of
words such as "believes," "estimates," "expects," "projects," "may," "will,"
"intends," "plans," or "anticipates," or by discussions of strategy, plans or
intentions. 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; our liquidity and
financial resources; our outlook with respect to the Company and the
manufactured housing business in general; the expected effect of certain risks
and uncertainties on our business, financial condition and results of
operations; economic conditions and consumer confidence; increasing interest
rates; potential acquisitions, strategic investments and other expansions;
operational and legal risks; how we may be affected by the COVID-19 pandemic or
any other pandemic or outbreak; labor shortages and the pricing and availability
of raw materials; governmental regulations and legal proceedings; the
availability of favorable consumer and wholesale manufactured home financing;
and the ultimate outcome of our commitments and contingencies.

Forward-looking statements involve risks, uncertainties and other factors that
may cause our actual results, performance or achievements to be materially
different from those expressed or implied by such forward-looking statements,
many of which are beyond our control. To the extent that our assumptions and
expectations differ from actual results, our ability to meet such
forward-looking statements, including the ability to generate positive cash flow
from operations, may be significantly hindered. Factors that could affect our
results and cause them to materially differ from those contained in the
forward-looking statements include, without limitation, those discussed under
Item 1A, "Risk Factors," and elsewhere in this Annual Report. We expressly
disclaim any obligation to update any forward-looking statements contained in
this Annual Report, whether as a result of new information, future events or
otherwise, except as required by law. For all of these reasons, you should not
place undue reliance on any such forward-looking statements included in this
Annual Report.


The following should be read in conjunction with the Company’s consolidated financial statements and accompanying notes included in Part IV of this report. References to the “note” or “notes” refer to the notes to the consolidated financial statements.

Company Outlook

Housing demand remains strong as qualified individuals continue to seek affordable homeownership. Stay-at-home order rates have moderated from the extreme highs we saw in summer 2020 through summer 2021, but still remain above pre-pandemic rates, which we considered high.

We maintain a backlog of orders from our network of licensed distributors,
communities and developers. Distributors may cancel orders prior to production
without penalty. Accordingly, until the production of a particular unit has
commenced, we do not consider our backlog to be firm orders. We strive to manage
our production levels, capacity and workforce size based upon current market
demand. The backlog of home sales orders at April 2, 2022 was $1.1 billion in
total, up $511 million from $603 million as of April 3, 2021. The year over year
increase includes $264 million attributable to Commodore. Backlog excludes home
orders that have been paused or canceled at the request of the customer.

Although we continue to experience hiring challenges and other inefficiencies
from building material supply disruptions, we have reduced our total open
production positions needed by nearly 25% over the past year, bringing our total
average plant capacity utilization rate to exceeding 80% during the fourth
fiscal quarter of 2022, which is above pre-pandemic levels.

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While it is difficult to predict the future of housing demand, employee
availability, supply chain and Company performance and operations, maintaining
an appropriately sized and well-trained workforce is key to increasing
production to meet increased demand, and we face challenges in overcoming
labor-related difficulties in the current environment to increase home
production. We continually review the wage rates of our production employees and
have established other monetary incentive and benefit programs, with a goal of
providing competitive compensation. We are also working to more extensively use
web-based recruiting tools, update our recruitment brochures and improve the
appearance and appeal of our manufacturing facilities to improve the recruitment
and retention of qualified production employees and reduce annualized turnover
rates. We believe our ability to recruit the workforce we need to help meet the
overall need for affordable housing continues to improve.

We continue to make certain commercial loan programs available to members of our
wholesale distribution chain. Under direct commercial loan arrangements, we
provide funds for financed home purchases by distributors, community owners and
developers (see Note 7 to the Consolidated Financial Statements). Our
involvement in commercial loans helps to increase the availability of
manufactured home financing to distributors, community owners and developers and
provides additional opportunity for product exposure to potential home buyers.
While these initiatives support our ongoing efforts to expand product
distribution, they also expose us to risks associated with the creditworthiness
of this customer base and our inventory financing partners.

In the financial services segment, we continue to assist customers in need by
servicing existing loans and insurance policies and complying with state and
federal regulations regarding loan forbearance, home foreclosures and policy
cancellations. Certain loans serviced for investors expose us to cash flow
deficits if customers do not make contractual monthly payments of principal and
interest in a timely manner. For certain loans serviced for Ginnie Mae and
Freddie Mac, and home-only loans serviced for certain other investors, we must
remit scheduled monthly principal and/or interest payments and principal
curtailments regardless of whether monthly mortgage payments are collected from
borrowers. Ginnie Mae permits cash obligations on loans in forbearance from
COVID-19 to be offset by other incoming cash flows from loans such as loan
pre-payments. Through fiscal year 2022, monthly collections of principal and
interest from borrowers have exceeded scheduled principal and interest payments
owed to investors; however, mandatory extended forbearance under the CARES Act
and certain other regulations related to COVID-19 could negatively impact cash
obligations in the future.

The lack of an efficient secondary market for manufactured home-only loans and
the limited number of institutions providing such loans results in higher
borrowing costs for home-only loans and continues to constrain industry growth.
We work independently and with other industry participants to develop secondary
market opportunities for manufactured home-only loan and non-conforming mortgage
portfolios and expand lending availability in the industry. Additionally, we
continue to invest in community-based lending initiatives that provide home-only
financing to residents of certain manufactured home communities. We also develop
and invest in home-only lending programs to grow sales of homes through
traditional distribution points. We believe that growing our investment and
participation in home-only lending may provide additional sales growth
opportunities for our factory-built housing operations and reduce our exposure
to the actions of independent lenders.

We also work independently and with industry trade associations to encourage
favorable legislative and GSE action to address the financing needs of buyers of
affordable homes. Federal law requires GSEs to implement the "Duty to Serve"
requirements specified in the Federal Housing Enterprises Financial Safety and
Soundness Act of 1992, as amended by the Housing and Economic Recovery Act of
2008. In April 2022, Fannie Mae and Freddie Mac released their Underserved
Markets Plans for 2022-2024 that describe, with specificity, the actions they
would take over the three-year period to fulfill the "Duty to Serve"
obligation. As with prior plans, the 2022-2024 plans offer enhanced mortgage
loan products for manufactured homes titled as real property, including Fannie
Mae's "MH Advantage" and Freddie Mac's "ChoiceHome" programs that began in the
latter part of calendar year 2018. Although some progress has been made with
these programs, meaningful positive impact in the form of increased home orders
has yet to be realized. The plans do not include purchases of home-only loans
during the three-year timeframe. Expansion of the secondary market for home-only
loans through GSEs could support further demand for housing as lending options
would likely become more available to home buyers.

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The insurance subsidiary is subject to adverse effects from excessive policy
claims that may occur during periods of inclement weather, including seasonal
spring storms or fall hurricane activity in Texas where most of its policies are
underwritten. Where applicable, losses from catastrophic events are mitigated by
reinsurance contracts in place as part of our loss mitigation structure.

Operating results

Fiscal 2022 vs. Fiscal 2021

Net revenue.

Net revenue consisted of the following for fiscal years 2022 and 2021,

                                                             Year Ended
                                                    April 2,             April 3,
 ($ in thousands, except revenue per home sold)       2022                 2021                         Change
Net revenue:
Factory-built housing                            $ 1,556,283          $ 1,037,889          $ 518,394                 49.9  %
Financial services                                    70,875               70,162                713                  1.0  %
                                                 $ 1,627,158          $ 1,108,051          $ 519,107                 46.8  %

Total homes sold                                         16,697               14,214              2,483              17.5  %

Net manufactured home revenue per home sold $93,207 $73,019 $20,188

                 27.6  %

In the factory-built housing segment, the increase in Net revenue was primarily
due to higher legacy home selling prices, which provided $302.0 million, and
higher legacy home sales volume from increased factory capacity utilization,
which contributed $39.4 million. The higher home prices were primarily driven by
product price increases, and to a lesser extent a shift toward more
multi-section homes. Home sales volume also increased from the addition of
Craftsman Homes, LLC and Craftsman Homes Development, LLC (together,
"Craftsman") and Commodore, which provided $13.8 million and $166.7 million,
respectively. These increases were partially offset by the prior year period
containing an extra week of production, given the fiscal calendar.

Net factory-built housing revenue per home sold is a volatile metric dependent
upon several factors. A primary factor is the price disparity between sales of
homes to independent distributors, builders, communities and developers
("Wholesale") and sales of homes to consumers by Company-owned retail stores
("Retail"). Wholesale sales prices are primarily comprised of the home and the
cost to ship the home from a homebuilding facility to the home-site. Retail home
prices include these items and retail markup, as well as items that are largely
subject to home buyer discretion, including, but not limited to, installation,
utility connections, site improvements, landscaping and additional services.
Changes to the proportion of home sales among our distribution channels between
reporting periods impacts the overall net revenue per home sold. For fiscal
2022, we sold 13,888 homes Wholesale and 2,809 Retail versus 11,225 homes
Wholesale and 2,989 homes Retail in the prior year. Our homes are constructed in
one or more floor sections ("modules") which are then installed on the
customer's site. Fluctuations in net factory-built housing revenue per home sold
are also partially the result of changes in the number of modules per home, the
selection of different home types/models and optional home upgrades, creating
changes in product mix. These selections vary regularly based on consumer
interests, local housing preferences and economic circumstances. Product prices
are also periodically adjusted for the cost and availability of raw materials
included in, and labor used to produce, each home. For these reasons, we have
experienced, and expect to continue to experience, volatility in overall net
factory-built housing revenue per home sold. The table below presents the mix of
modules and homes sold for the fiscal years 2022 and 2021, respectively:

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  Table of Contents

                                          Year Ended
                            April 2,                        April 3,
                              2022                            2021                       Change
                   Modules            Homes         Modules           Homes       Modules       Homes
HUD code homes     24,497            14,136         20,948           12,339        16.9  %      14.6  %
Modular homes       3,569             1,742          2,009              945        77.7  %      84.3  %
Park model RVs        819               819               930           930       (11.9) %     (11.9) %
                   28,885            16,697         23,887           14,214        20.9  %      17.5  %

Financial services segment revenue increased 1.0% primarily due to $4.5 million
from more insurance policies in force in the current year, $1.5 million in
greater loan servicing income and $1.1 million in net higher proceeds from home
loan sales. These increases were partially offset by $3.8 million in lower
interest income earned on the acquired consumer loan portfolios that continue to
amortize and $2.6 million in lower unrealized gains on marketable equity
securities in the insurance subsidiary's portfolio.

Gross profit.

Gross profit consisted of the following for fiscal years 2022 and 2021,

                                             Year Ended
                                      April 2,        April 3,
($ in thousands)                        2022            2021                 Change
Gross profit:
Factory-built housing               $ 372,250       $ 199,604       $ 172,646        86.5  %
Financial services                     36,499          39,373          (2,874)       (7.3) %
                                    $ 408,749       $ 238,977       $ 169,772        71.0  %

Gross profit as % of Net revenue:
Consolidated                             25.1  %         21.6  %            N/A       3.5  %
Factory-built housing                    23.9  %         19.2  %            N/A       4.7  %
Financial services                       51.5  %         56.1  %            N/A      (4.6) %

In the factory-built housing segment, Gross profit increased $323.8 million from
higher home sales prices and $30.1 million from more units sold, partially
offset by $181.3 million from higher material costs. In the financial services
segment, Gross profit decreased primarily due to higher weather related claims,
lower interest income earned on the acquired consumer loan portfolios and lower
unrealized gains on marketable equity securities compared to the prior year

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Selling, general and administrative expenses.

Selling, general and administrative expenses consisted of the following items for fiscal years 2022 and 2021, respectively:

                                                            Year Ended
                                                    April 2,           April 3,
($ in thousands)                                      2022               2021                        Change
Selling, general and administrative expenses:
Factory-built housing                             $ 186,278          $ 130,498          $  55,780                 42.7  %
Financial services                                   19,975             19,654                321                  1.6  %
                                                  $ 206,253          $ 150,152          $  56,101                 37.4  %

Selling, general and administrative expenses as %
of Net revenue:                                        12.7  %            13.6  %                N/A              (0.9) %

Selling, general and administrative expenses related to factory-built housing
increased primarily due to $30.4 million in higher wages and benefits and
incentive compensation expense on improved earnings, $19.0 million attributable
to acquired entities, $6.9 million in expenses incurred in engaging third-party
consultants in relation to pursuing the non-recurring energy efficient home tax
credits and $2.4 million in Commodore related acquisition transaction costs,
partially offset by $4.2 million of amortization of additional Director &
Officer insurance premiums in the prior year that did not repeat.

Financial services selling, general and administrative expenses increased primarily due to higher payroll expenses resulting from continued growth and higher payroll and benefits expenses.

As a percentage of net sales, selling, general and administrative expenses increased 90 basis points due to better utilization of fixed costs on higher sales.

Interest charges.

Interest expense was $0.7 million in both fiscal year 2022 and 2021, and
consists primarily of debt service on the financings of manufactured home-only
loans and interest related to finance leases. We realized a decrease in interest
expense from the elimination of the securitized bond interest as we exercised
our right to repurchase the 2007-1 securitized loan portfolio in August 2019.
However, this was offset by an increase in interest expense from the secured
credit facilities as well as additional finance leases.

Other income, net.

Other income, net primarily consists of realized and unrealized gains and losses
on corporate investments, interest income related to commercial loan receivable
balances, interest income earned on cash balances and gains and losses from the
sale of property, plant and equipment and assets held for sale. For fiscal years
2022 and 2021, Other income, net was $10.2 million and $8.8 million,
respectively, an increase of $1.4 million or 15.9%. This increase was primarily
from a $3.3 million revaluation gain recognized on the consolidation of an
equity method investment and $1.2 million higher interest income on commercial
loans from the addition of Commodore, partially offset by $3.2 million lower
unrealized gains on corporate equity investments in the current year.

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Income before taxes.

Income before income taxes consisted of the following for fiscal years 2022 and
2021, respectively:

                                     Year Ended
                               April 2,       April 3,
($ in thousands)                 2022           2021                Change
Income before income taxes:
Factory-built housing         $ 197,282      $ 78,937      $ 118,345       149.9  %
Financial services               14,707        17,975         (3,268)      (18.2) %
                              $ 211,989      $ 96,912      $ 115,077       118.7  %

Income Tax Expense.

Income tax expense was $14.2 million, resulting in an effective tax rate of 6.7%
for the fiscal year ended April 2, 2022, compared to income tax expense of $20.3
million and an effective rate of 20.9% for the fiscal year ended April 3, 2021.
The lower effective tax rate in the current year period primarily relates to
$35.7 million in estimated non-recurring net tax credits related to the sale of
energy efficient homes between fiscal year 2018 and fiscal third quarter 2022,
available under the Internal Revenue Code §45L, offset by an increase in income
before income taxes. The tax credit for energy efficient homes expired in its
current form as of December 31, 2021.

Fiscal 2021 vs. Fiscal 2020

See Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the company’s 2021 Annual Report on Form 10-K.

Cash and capital resources

We believe that cash and cash equivalents at April 2, 2022, together with cash
flow from operations, will be sufficient to fund our operations, cover our
obligations and provide for growth for the next 12 months and into the
foreseeable future. We maintain cash in U.S. Treasury and other money market
funds, some of which are in excess of federally insured limits. We expect to
continue to evaluate potential acquisitions of, or strategic investments in,
businesses that are complementary to the Company, as well as other expansion
opportunities. Such transactions may require the use of cash and have other
impacts on our liquidity and capital resources. Because of our sufficient cash
position, we have not historically sought external sources of liquidity, with
the exception of certain credit facilities for the home-only lending programs.
Regardless, depending on our operating results and strategic opportunities, we
may choose to seek additional or alternative sources of financing in the future.
There can be no assurance that such financing would be available on satisfactory
terms, if at all. If this financing were not available, it could be necessary
for us to reevaluate our long-term operating plans to make more efficient use of
our existing capital resources at such time. The exact nature of any changes to
our plans that would be considered depends on various factors, such as
conditions in the factory-built housing industry and general economic conditions
outside of our control.

State insurance regulations restrict the amount of dividends that can be paid to
stockholders of insurance companies. As a result, the assets owned by our
insurance subsidiary are generally not available to satisfy the claims of Cavco
or its legal subsidiaries. We believe that stockholders' equity at the insurance
subsidiary remains sufficient and do not believe that the ability to pay
ordinary dividends to Cavco will be restricted per state regulations.

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The following is a summary of the Company's cash flows for fiscal years 2022 and
2021, respectively:

                                                                Year Ended
                                                        April 2,           April 3,
($ in thousands)                                          2022               2021             $ Change
Cash, cash equivalents and restricted cash at
beginning of the fiscal year                          $ 339,307          $ 255,607          $  83,700
Net cash provided by operating activities               144,224            114,031             30,193
Net cash used in investing activities                  (159,102)           (23,349)          (135,753)
Net cash used in financing activities                   (65,095)            (6,982)           (58,113)

Cash, cash equivalents and restricted cash at the end of the year

                                       $ 259,334          $ 

339 307 ($79,973)

Net cash provided by operating activities increased primarily due to the
increased profitability, partially offset by increased costs for operating
activities, including rising costs of our raw materials and higher purchases of
such materials, increased accounts receivables from timing of collections and
increased sales and refunds related to the estimated net tax credits under the
Internal Revenue Code §45L which have not been received.

Consumer loan originations decreased $2.6 million to $159.0 million during the
year ended April 2, 2022, from $161.6 million during the year ended April 3,
2021. Proceeds from the sale of consumer loans provided $184.8 million in cash,
compared to $167.1 million in the previous year, a net increase of $17.7

Net cash used in investing activities for the year ended April 2, 2022
included purchases of Commodore and Craftsman, as well as purchases of property,
plant and equipment. Net cash used in investing activities for the year ended
April 3, 2021 was primarily for purchases of property, plant and equipment,
including the new park model RV facility in Arizona, which is expected to be
operational in mid-calendar year of 2022, partially offset by net proceeds from
sales of investments.

Net cash used in financing activities for the year ended April 2, 2022 was
primarily related to common stock repurchases and the payments of the secured
term loans, which have been paid in full as of January 1, 2022, partially offset
by proceeds received from the exercise of stock options. Net cash used in
financing activities for the year ended April 3, 2021 was mainly for the
payments of tax liabilities on the exercise of stock options and payments on
secured financings.

Obligations and Commitments

We enter into commercial loan agreements with distributors, communities and
developers under which the Company provides funds for financing homes. In
addition, we enter into commercial loan arrangements with certain distributors
of our products under which the Company provides funds for wholesale purchases.
We have also invested in community-based lending initiatives that provide
home-only financing to new residents of certain manufactured home communities.
For additional information regarding our commercial loans receivable, see Note 7
to the Consolidated Financial Statements. Further, we invest in and develop
home-only loan pools and lending programs to attract third-party financier
interest in order to grow sales of new homes through traditional distribution

We have contractual lease obligations for certain production and retail
locations, office space and equipment with durations ranging from monthly to 20
years. Certain lease agreements include one or more options to renew, with
renewal terms that can extend the lease term by one to three years or more. For
additional information related to these obligations, see Note 9 to the
Consolidated Financial Statements. In addition, we also have contingent
commitments at April 2, 2022 consisting of contingent repurchase obligations,
construction contingent commitments, interest rate lock commitments ("IRLCs")
and forward loan sale commitments. For additional information related to these
contingent obligations, see Note 16 to the Consolidated Financial Statements.

See Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources” of the Company’s 2021 Annual Report on Form 10-K for an analysis of changes in liquidity between fiscal years 2021 and 2020.


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Critical accounting estimates

Our discussion and analysis of the Company's financial condition and results of
operations is based upon its Consolidated Financial Statements, which have been
prepared in accordance with U.S. generally accepted accounting principles. The
preparation of these financial statements requires us to make estimates and
judgments that affect the reported amounts of assets, liabilities, revenues and
expenses and related disclosure of contingent assets and liabilities. We base
these estimates and judgments on historical experience and on various other
factors that are believed to be reasonable under the circumstances, the results
of which form the basis for making judgments about the carrying values of assets
and liabilities that are not readily apparent from other sources. Actual results
may differ from these estimates under different assumptions or conditions. See
"Forward-Looking Statements" above.

We believe that the following accounting policies are essential to the results of operations of the Company or may affect the significant judgments and estimates used in the preparation of the consolidated financial statements and should be read in conjunction with the notes to the consolidated financial statements.

Warranties. Estimates include the number of homes still under warranty,
including homes in distributor inventories, homes purchased by consumers still
within the one-year warranty period, the timing in which work orders are
completed and the historical average costs incurred to service a home. While the
number of homes still under warranty and the timing in which work orders are
completed are readily determinable, the average costs incurred will vary based
on market prices and availability, which are the primary subjective inputs in
estimating the reserve. We expect that a 5% increase in average costs would
increase our reserve proportionally.

Income Taxes and Deferred Tax Assets and Liabilities. The determination of the
need for, or amount of, any valuation allowance involves significant judgment
and is based upon the evaluation of both positive and negative evidence,
including estimates of anticipated taxable profits in various jurisdictions with
which the deferred tax assets are associated. At April 2, 2022, based on
historical profits earned and forecasted taxable profits, we determined that all
deferred tax assets, except for certain state net operating loss deferred tax
assets, would be utilized in future periods. Additionally, the overall state
income tax rate is based on income apportionment by state, which is estimated
using prior year results, along with expected current year impacts.

Goodwill and Other Intangibles. We evaluate the fair value of reporting units
and when we record an impairment loss on goodwill. During the fourth quarter of
fiscal year 2022 we conducted our annual goodwill impairment test and no
impairment charges were recorded. The estimated fair values of our two reporting
units exceeded their carrying values at the date of their most recent estimated
fair value determination. However, estimated fair values would need to decrease
by over 450% for there to be indicators of impairment. The fair value evaluation
of intangible assets acquired includes the use of acceptable valuation
approaches utilizing unobservable inputs, which may lead to a high level of
uncertainty. These Level 3 inputs relate to forecasts of future cash flows,
pre-tax income and revenue growth rates, as well as the selection of royalty and
discount rates. The analysis depends upon a number of judgments, estimates and
assumptions. Accordingly, such testing is subject to uncertainties, which could
cause fair value to fluctuate.

Other topics

Impact of Inflation. At the end of the period, inflation was the highest in the
U.S. in over 30 years. Our ability to maintain certain levels of gross margin
can be adversely impacted by sudden increases in specific costs, such as the
increases in material and labor. In addition, measures used to combat inflation,
such as increases in interest rates, could also have an impact on the ability of
home buyers to obtain affordable financing. We can give no assurance that
inflation will not affect future profitability.

Recent accounting pronouncements

See Note 1 to the consolidated financial statements for a discussion of recently issued and adopted accounting pronouncements.


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